The author is grateful to the editor Marlon Boarnet and three anonymous referees for very helpful comments. The author also thanks Yannis Ioannides, Yasuhiro Sato, Matthias Wrede, Yves Zenou, and seminar participants at the 6th Meeting of the Urban Economics Association in Miami and the 2011 SUDSWEc Workshop at Stockholm School of Economics. All remaining errors are my own. An earlier version of the paper is distributed with the title Job Search in the Muth–Mills Model: Theory and Policies.
SEARCH FRICTIONS, UNEMPLOYMENT, AND HOUSING IN CITIES: THEORY AND POLICIES†
Article first published online: 15 JAN 2014
© 2014 Wiley Periodicals, Inc.
Journal of Regional Science
Volume 54, Issue 3, pages 422–449, June 2014
How to Cite
Xiao, W. (2014), SEARCH FRICTIONS, UNEMPLOYMENT, AND HOUSING IN CITIES: THEORY AND POLICIES. Journal of Regional Science, 54: 422–449. doi: 10.1111/jors.12098
- Issue published online: 2 JUN 2014
- Article first published online: 15 JAN 2014
- Manuscript Revised: AUG 2013
- Manuscript Accepted: AUG 2013
- Manuscript Received: JUN 2012
We propose an urban search-matching model with land development. Wages, unemployment, prices of housing and land are endogenously determined. We characterize the steady-state equilibrium and then discuss the issue of efficiency. To explore interactions among markets, we implement comparative static analysis. We also consider three policies: an entry-cost policy that reduces firms' entry, a transportation policy that reduces commuting costs, and a housing policy that decreases rental prices. We find that the transportation and housing policies are more efficient if the unemployment rate is low, while the entry-cost policy is more efficient if the unemployment rate is high.