The role of labor market in urban sprawl

The goal of this paper is to specify the link between urban sprawl and labor market. To this fashion, I build a urban labor model with housing consumption, with a social planer problem and where spatial allocation of workers is directed by a Nash equilibrium In the context of a Potential game. Two results appear. First, I demonstrate the existence and the uniqueness of a market equilibrium where an endogenous closed form solution for the urban sprawl is obtained and where the role of each labor parameter on sprawl is unambiguous. Second, I underscore that the urban sprawl in the decentralized economy is inefficient (i.e. the degree of urban sprawl is to high) because firms compensate workers too much for their spatial costs.