Why poor people do not move: job search behaviour and disequilibrium amongst local labor markets

A model of why people do not move between local labor markets is developed by means of a set of concepts derived from the job search and contracts literature. Emphasis is placed on how the environment, in which individuals behave, determines outcomes. It is argued that individuals act rationally, but that in a world of inequality rational behavior can reinforce disequilibrium and the perpetuation of spatial-economic inequality. A hypothetical example of two local labor markets is used to illustrate our argument.