Search Theory, Spatial Labor Markets, and Commuting

Abstract

Search theory is used to model spatial interactions between residential and employment locations. A model for an urbanized region in which employment is concentrated in a number of different centers is developed. It is shown that in this model wasteful or excess commuting occurs as a consequence of maximizing behavior of both employers and workers. The model is compatible with a spatial equilibrium. If informational problems disappear, the labor market subdivides into a number of conventional monocentric cities. An example concerning an urban area with two employment centers is discussed in detail. The model appears to be robust to relaxations of the assumed absence of residential and job mobility.