Space And Unemployment: The Labour-Market Effects Of Spatial Mismatch

The aim of this paper is to analyse the effects of suburban housing discrimination on the wages and unemployment rates of black workers. In a duocentric city with efficiency wages, it is shown that, when blacks experience suburban housing discrimination, they face a higher unemployment rate in the central city than in the suburbs, also earning lower wages in the centre. An increase in commuting costs is shown to raise both these disparities, and a number of other results are established. The analysis thus generates a link between housing-market discrimination and a seemingly unrelated phenomenon: unemployment in the labour market. In doing so, the paper provides new insight into the spatial mismatch hypothesis.