TY  - RPRT
        AU  - Sato, Yasuhiro
AU  - Zenou, Yves
        TI  - How Urbanization Affects Employment and Social Interactions
        PY  - 2014/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 7914
        UR  - https://www.iza.org/publications/dp7914
        AB  - We develop a model where the unemployed workers in the city can find a job either directly or through weak or strong ties. We show that, in denser areas, individuals choose to interact with more people and meet more random encounters (weak ties) than in sparsely populated areas. We also demonstrate that, for a low urbanization level, there is a unique steady-state equilibrium where workers do not interact with weak ties, while, for a high level of urbanization, there is a unique steady-state equilibrium with full social interactions. We show that these equilibria are usually not socially efficient when the urban population has an intermediate size because there are too few social interactions compared to the social optimum. Finally, even when social interactions are optimal, we show that there is over-urbanization in equilibrium.
        KW  - urban economics
KW  - social interactions
KW  - strong ties
KW  - weak ties
KW  - labor market
        ER  -