Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248664 
Year of Publication: 
2021
Series/Report no.: 
ECONtribute Discussion Paper No. 122
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
Spatial differences in labor market performance are large and highly persistent. Using data from the United States, Germany, and the United Kingdom, we document striking similarities in spatial differences in unemployment, vacancies, job finding, and job filling within each country. This robust set of facts guides and disciplines the development of a theory of local labor market performance. We find that a spatial version of a Diamond-Mortensen-Pissarides model with endogenous separations and on-the-job search quantitatively accounts for all the documented empirical regularities. The model also quantitatively rationalizes why differences in job-separation rates have primary importance in inducing differences in unemployment across space while changes in the job-finding rate are the main driver in unemployment fluctuations over the business cycle.
Subjects: 
Local Labor Markets
Unemployment
Vacancies
Search and Matching
JEL: 
J63
J64
E24
E32
R13
Document Type: 
Working Paper

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