Monday 12
B6 - Labor market, Unemployment
Chair: Etienne Lehmann
› 13:40 - 14:05 (25min)
› Room 521 - L. Jouvet
Regional Equilibrium Unemployment with Agglomeration Effects
Guillaume Wilemme  1@  
1 : Aix-Marseille School of Economics  (AMSE)  -  Website
Ecole Centrale Marseille (ECM), Ecole des Hautes Etudes en Sciences Sociales (EHESS), Centre national de la recherche scientifique (CNRS)
GREQAM, Centre de la Charité, 2 rue de la Charité, 13236 Marseille Cedex 02 -  France

Patterns of unemployment considerably vary along the geographical dimension.
In this article, I study the role of agglomeration effects on the dynamics of local
unemployment. An original model of the regional labor market with search and
mobility frictions is built. The impact of place-based subsidies and unemployment
benets crucially depends on the sign and strength of the agglomeration forces.
With agglomeration productivity gains, negative regional employment shocks are
amplied because profit opportunities deteriorate, inducing higher mobility out of
the region. The model is able to reproduce the strong persistence of the shock on
the unemployment rate and the region's size.



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