Spatial Equilibrium with Unemployment and Wage Bargaining : Theory and Estimation ∗

@inproceedings{Beaudry2012SpatialEW,
  title={Spatial Equilibrium with Unemployment and Wage Bargaining : Theory and Estimation ∗},
  author={Paul Beaudry and David A. Green and Ben Sand},
  year={2012}
}
In this paper, we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labour markets. Because of the frictions, firms and workers find themselves in bilateral monopoly positions when determining wages. Although workers are not at each instant perfectly mobile across cities, in the baseline model we assume that workers flows are sufficient to equate expected utility across markets. We use the model to explore the… CONTINUE READING

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