The dominant explanation of spatial unemployment in the literature assumes that workers must live in an area in order to be able to access job offers. This gives rise to "compensating variations" in local wages and unemployment. However, for many occupations search is clearly conducted over...

A labor-market model is constructed in which migration may exhibit distance deterrence and cumulative inertia. (Migration probabilities fall with distance and length of residence, respectively.) The combination of these two processes yields higher equilibrium unemployment rates in remote areas....