Citation

Discussion Paper Details

Please find the details for DP1870 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Local Unemployment and Specialization

Author(s): Peer Ritter and Uwe Walz

Publication Date: April 1998

Keyword(s): Efficiency Wages, local unemployment and Specialization and heterogeneity of labour

Programme Area(s): Human Resources

Abstract: Recent empirical work has shown that there exists a negative relation between wages and unemployment estimated across regions. Our model recognizes the spatial dimension of the so-called wage-curve by using a Hotelling/Salop framework in which a finite number of firms compete for heterogeneous workers. We incorporate this set-up into an efficiency-wage framework. In setting wages, firms perceive their influence on the wage-unemployment trade-off, thus taking the employment decisions of their competitors as an externality. The model predicts that in larger regions, with firms demanding more specialized labour, workers receive higher wages and face lower unemployment.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1870

Bibliographic Reference

Ritter, P and Walz, U. 1998. 'Local Unemployment and Specialization'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1870