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Comparative Advantage and Skill Premium of Regions

Author

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  • Kohei Nagamachi

    (Graduate School of Economics, The University of Tokyo)

Abstract

This paper provides one explanation for why a positive correlation is observed between the skill premium and income of regions. In doing so, this paper provides a model of self-organized sorting and skill premium with a continuum of heterogeneous individuals as well as a continuum of industries or tasks within a production process. It is found that the positive correlation emerges through the interaction between the location-occupation choice by individuals and regional comparative advantage. Spatial equilibrium, sorting, and product differentiation play a key role in determining the way in which such an interaction works.

Suggested Citation

  • Kohei Nagamachi, 2013. "Comparative Advantage and Skill Premium of Regions," Economics Bulletin, AccessEcon, vol. 33(3), pages 1681-1694.
    • Handle: RePEc:ebl:ecbull:eb-13-00018
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I3-P157.pdf
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    References listed on IDEAS

    as
    1. Donald R. Davis & Jonathan I. Dingel, 2019. "A Spatial Knowledge Economy," American Economic Review, American Economic Association, vol. 109(1), pages 153-170, January.
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    3. Kiminori Matsuyama, 2013. "Endogenous Ranking and Equilibrium Lorenz Curve Across (ex ante) Identical Countries," Econometrica, Econometric Society, vol. 81(5), pages 2009-2031, September.
    4. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    5. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    comparative advantage; skill premium; sorting;
    All these keywords.

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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