Urban Labor Economics
YVES ZENOU
Stockholm University
2009
Cambridge University Press

1. Simple Models of Urban Search-Matching 10
1. Introduction 10
2. The Benchmark Model 11
3. Search Effort as a Function of Distance to Jobs 30
4. Endogenous Search Intensity and Housing Consumption 42
5. Discussion 58
6. Notes on the Literature 62
2. Extensions of Urban Search-Matching Models 65
1. Introduction 65
2. Workers’ Heterogeneity in Training Costs 67
3. Endogenous Job Destruction 74
4. Positive Mobility Costs 88
5. Very High Mobility Costs 96
6. Wage Posting 104
7. Notes on the Literature 118
3. Non-Monocentric Cities and Search-Matching 121
1. Introduction 121
2. Rural-Urban Migration and Search 123
3. Job Matching and Search in Multicentric Cities 132
4. Job Matching and Assignment in a System of Cities 143
5. Notes on the Literature 163
of Urban EfficiencyWages 171
1. Introduction 171
2. The Benchmark Model 172
3. Endogenous Housing Consumption 183
4. Open Cities and Resident Landlords 190
5. City Structure 195
6. Long-Run Equilibrium with Free Entry 203
7. Endogenous Unemployment Benefit 206
8. Notes on the Literature 210
5. Extensions of Urban EfficiencyWage Models 212
1. Introduction 212
2. Effort as a Function of Distance to Jobs 213
3. Effort and Leisure 221
4. High Relocation Costs 229
5. Effort, Leisure, and Relocation Costs 239
6. Notes on the Literature 245
6. Non-Monocentric Cities and EfficiencyWages 248
1. Introduction 248
2. Rural-Urban Migration: The Harris-Todaro Model
with a Land Market 249
3. Migration between Cities of Different Sizes 255
4. Migration within Cities: Dual Labor Markets in
a Duocentric City 264
5. Endogenous Formation of Monocentric Cities
with Unemployment 286
6. Notes on the Literature 297
PART 3. URBAN GHETTOS AND THE LABOR MARKET 301
7. The SpatialMismatch Hypothesis: A Search-Matching Approach 309
1. Introduction 309
2. Access to Job Information 310
3. Different Entry Costs 319
4. Different Transport Modes 330
5. Notes on the Literature 346
8. The Spatial Mismatch Hypothesis: An Efficiency-Wage
Approach 347
1. Introduction 347
2. The Firms’ Perspective 348
3. TheWorkers’ Perspective 354
4. A More General Model 367
5. Notes on the Literature 375
9. Peer Effects, Social Networks, and Labor Market Outcomes
in Cities 376
1. Introduction 376
2. Social Networks as Externalities 379
3. Social Networks as Dyads 395
4. Social Networks as Explicit Graphs 404
5. Discussion 419
6. Notes on the Literature 421
General Conclusion 423
A. Basic Urban Economics 427
1. The Basic Model with Identical Agents 427
2. The Basic Model with Heterogenous Agents 447
B. Poisson Process and Derivation of Bellman Equations 453
1. Poisson Process 453
2. An IntuitiveWay of Deriving the Bellman Equations 457
3. A FormalWay of Deriving the Bellman Equations 459
C. The Harris-Todaro Model 462
1. A Simple Model with ExogenousWages 462
2. The Harris-Todaro Model with MinimumWages 467
3. The Harris-Todaro Model with EfficiencyWages 470
4. The Harris-Todaro Model with Urban Search Externalities 476
Bibliography 481
Author Index 501
Subject Index 506