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A Companion to Urban Economics - Arnott and McMillen - Part 6

P A R T V I Urban Labor Markets and Macroeconomics Urban economists have a longstanding interest in the workings of urban labor markets in general and in the problem of unemployment in particular. Unemployment is far from an urban problem | A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd I PART 7 i Urban Labor Markets and Macroeconomics A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd Urban Labor Markets and Macroeconomics Urban economists have a longstanding interest in the workings of urban labor markets in general and in the problem of unemployment in particular. Unemployment is far from an urban problem indeed in many countries unemployment rates are far higher in rural areas than within cities. However the problem is often more noticeable in cities because high unemployment rates tend to be spatially concentrated. Neighborhoods with high rates of unemployment and poverty are often in close proximity to areas of great wealth. It is human nature to be more concerned about nearby than distant problems. In addition high poverty rates can increase the tax burden for the employed raise crime rates and affect school quality. Both for selfish and unselfish reasons the spatial concentration of unemployment and poverty make the workings of urban labor markets a vital concern of urban residents. Labor economists and macroeconomists traditionally do not incorporate space directly into their studies. Although well-known studies of local labor markets have used US states as their unit of analysis few believe that Los Angeles and San Francisco are in the same labor market let alone the agricultural areas of the San Joaquin Valley. Indeed the San Francisco labor market may be more similar and more closely tied to labor markets in Boston and Seattle than to rural areas in northern California. More significantly space affects the workings of the labor market directly. People tend to look close to home when searching for jobs. The typical metropolitan area has neighborhoods with few jobs and high unemployment even as other areas are growing rapidly with available jobs .