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 study the role of unemployment in the context of the endogeneous formation of a monocentric city in which firms set efficiency wages to deter shirking. We first show that, in equilibrium, the employed locate at the vicinity of the city-center, the unemployed reside at the city-edge and firms...

We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the...