The Intra-Urban Unemployment Gradient: The Influence of Location on Unemployment

Abstract

This paper explores the influence of location on unemployment differentials within Australia's largest city, Sydney. It is suggested that spatial frictions impede the search processes of unemployed residents. The most important friction is related to physical accessibility to work. Despite suburbanisation, in Sydney the concentration of job opportunities is still far greater in the centre than elsewhere. The second friction concerns information flows. The formal information network about job vacancies seems to service the inner area better than the fringe suburbs. As the analysis used data of 1976 and 1981, the possibility of involuntary unemployment must be considered. This creates a third spatial factor, firms' preferences for residents of areas close to their vacancies. With involuntary unemployment firms often have many similar candidates for single vacancies and may be particular in their standards of recruitment. Together, these three spatial factors imply a positive intra-urban unemployment gradient.

The hypothesis was tested using multiple regression analysis of census data so that the heterogeneity of workers and jobs could be taken into account. The results show that for all types of worker-junior and adult, male and female-the greater the distance of an area from the centre of Sydney the higher was the unemployment rate of its residents. This spatial cause is additional to the more well-known reasons for unemployment differentials which concern workers' characteristics such as education. Ceteris paribus, the further a worker lives from the centre, the higher his or her probability of being unemployed.