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URBAN UNEMPLOYMENT AND THE SPATIAL STRUCTURE OF LABOR MARKETS: AN EXAMINATION OF THE “TODARO PARADOX” IN A SPATIAL CONTEXT *
Author(s) -
Nakagome Masaki
Publication year - 1989
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1989.tb01230.x
Subject(s) - unemployment , economics , context (archaeology) , labour economics , spatial mismatch , developing country , economic growth , geography , archaeology
The Todaro paradox and the effects of job creation in urban areas will be re‐examined in our spatial model in which the radius of the labor market is endogenously determined by the rational choices of workers. The travel cost of workers plays a crucial role in the choice between two different types of response, migration or commuting. By considering travel costs, we find that the Todaro paradox can be applied to developed, as well as developing, countries. Job creation in urban areas can produce a paradoxical increase in urban unemployment in developed countries, because the low marginal cost of travel will significantly increase the radius of the urban labor market and create new labor supply without migration.