van Vuuren, Aico2016-06-202016-06-202016-061403-2465http://hdl.handle.net/2077/44596JEL: J00, J64, R14This paper investigates an equilibrium search model in which search frictions are increasing with the distance to a city’s central business district, allowing for on-the-job search and endogenous wage formation and land allocation. The findings suggest that the decentralized market results in a more segregated outcome than may be socially desirable. The externality comes from the misguided incentives for the low-paid workers, who have a high preference for central locations in order to climb up the job ladder. Policies reducing the rental costs of un- employed workers for locations close to the central business district may potentially increase welfare.41engsearchcity structureurban economicsText