We investigate the role of spatial frictions in search equilibrium unemployment. For that, we develop a model of the labor market in which workers? location in an agglomeration depends on commuting costs, the endogenous price of land and the value of job search and employment. We first show that...

We investigate the role of spatial frictions in search equilibrium unemployment. For that, we develop a model of the labor market in which workers’ location in an agglomeration depends on commuting costs, the endogenous price of land and the value of job search and employment. We first show...

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a microfoundation of the linear-in-means model and investigate its properties. We show that...