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On the impact of labor market matching on regional disparities

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  • THARAKAN, Joe
  • TROPEANO, Jean-Philippe

Abstract

We propose a model where imperfect matching between firms and workers on local labor markets leads to spatial agglomeration. We show that the occurrence of spatial agglomeration depends on initial size differences in terms of both number of workers and firms. We analyse the effect of different public policies. In our setting, the effect of a higher level of human capital on regional disparities depends on whether it makes workers more mobile on the labour market or more specialised. Policies that increase workers’ interregional mobility, increase the likelihood that regions diverge. Finally, competition policy is shown to reduce regional disparities.

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File URL: http://dx.doi.org/10.1111/j.1467-9787.2008.00600.x
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2151.

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Handle: RePEc:cor:louvrp:-2151

Note: In : Journal of Regional Science, 49(1), 57-80, 2009
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  14. Belleflamme, Paul & Picard, Pierre & Thisse, Jacques-Francois, 2000. "An Economic Theory of Regional Clusters," Journal of Urban Economics, Elsevier, vol. 48(1), pages 158-184, July.
  15. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, Elsevier, vol. 73(1), pages 85-105, July.
  16. Benabou, Roland, 1996. "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 63(2), pages 237-64, April.
  17. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 20(2), pages 189-212, September.
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  19. Kats, Amoz, 1995. "More on Hotelling's stability in competition," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(1), pages 89-93, March.
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