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LOCAL LABOR MARKETS, JOB MATCHING, AND URBAN LOCATION*
Author(s) -
BRUECKNER JAN K.,
THISSE JACQUESFRANÇOIS,
ZENOU YVES
Publication year - 2002
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-1-00007
Subject(s) - monopsony , exploit , matching (statistics) , labour economics , space (punctuation) , economics , spatial mismatch , socioeconomic status , business , computer science , population , statistics , demography , computer security , mathematics , sociology , operating system
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.