Local labor markets, job matching, and urban location

Jan K. Brueckner, Jacques François Thisse, Yves Zenou

Research output: Contribution to journalArticleResearchpeer-review

48 Citations (Scopus)

Abstract

We present a new way of modeling local labor markets by linking the space of workers' skills and the physical space of cities. The key lesson of our analysis is that firms exploit workers in these two spaces by setting wages that are below the competitive level. The degree of monopsony power depends on the elasticity of the firm's labor pool, which is inversely related to the costs workers incur in commuting and acquiring skills. Our analysis thus shows how socioeconomic ghettos emerge as workers with poor skill matches are also those who incur the highest commuting costs.

Original languageEnglish
Pages (from-to)155-171
Number of pages17
JournalInternational Economic Review
Volume43
Issue number1
DOIs
Publication statusPublished - Feb 2002
Externally publishedYes

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