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Agglomeration and regional unemployment differentials

vom Berge, Philipp
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Date of publication of this fulltext: 19 Jul 2011 05:55


Abstract

This paper develops a solvable general equilibrium agglomeration model, where search frictions for low-skilled immobile workers generate regional unemployment differentials. Contrary to other work in this field, the model yields a higher long-run unemployment rate in the core region. This is because low-skilled manufacturing jobs are more valuable there and unemployment works as a compensating ...

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