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Skills, Agglomeration and Segmentation

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Author Info
Mori Mori, Tomoya
Turrini, Alessandro Antonio

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Abstract

We investigate the role of skill heterogeneity in explaining location patterns induced by pecuniary externalities (Krugman (1991)). In our setting, sellers with higher skills perform better in the marketplace, and their sales are larger. Selling to distant locations leads to lower sales because of both (pecuniary) transport costs and communication costs that reduce the perceived quality of goods. A symmetry-breaking result is obtained: symmetric configurations cannot be stable, and regional inequality is inevitable. The relatively more skilled choose to stay in the location with higher aggregate income and skill, while the relatively less skilled stay in the other. The model allows us to analyse the links between the extent of interregional inequality and the extent of interpersonal skill inequality.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2645.

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Date of creation: Dec 2000
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Handle: RePEc:cpr:ceprdp:2645

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Related research
Keywords: Agglomeration; Core-Periphery Model; Interpersonal Inequality; Regional Inequality; Skill Heterogeneity; Transport And Communication Costs;

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

References listed on IDEAS
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  6. Linda Harris Dobkins & Yannis M. Ioannides, 1999. "Dynamic Evolution of the U.S. City Size Distribution," Discussion Papers Series, Department of Economics, Tufts University 9916, Department of Economics, Tufts University. [Downloadable!]
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    • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. TAKAHASHI, Takaaki, 2005. "Economic geography and endogenous determination of transportation technology," CORE Discussion Papers 2005014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  2. Berliant, Marcus & Kung, Fan-chin, 2009. "Can information asymmetry cause agglomeration?," MPRA Paper 17567, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Redding, Stephen J & Schott, Peter, 2003. "Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?," CEPR Discussion Papers 3739, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Nicola D. Coniglio, 2002. "Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force," Working Papers 2003_1, Department of Economics, University of Glasgow. [Downloadable!]
  5. Luci Ellis & Dan Andrews, 2001. "City Sizes, Housing Costs, and Wealth," RBA Research Discussion Papers rdp2001-08, Reserve Bank of Australia. [Downloadable!]
  6. Kristian Behrens & Frédéric Robert-Nicoud, 2008. "Survival of the Fittest in Cities: Agglomeration, Selection and Polarisation," SERC Discussion Papers 0012, Spatial Economics Research Centre, LSE. [Downloadable!]
    Other versions:
  7. Kyoko Hirose, 2005. "Migration and agglomeration with knowledge spillovers," Discussion Papers in Economics and Business 05-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
    Other versions:
  8. Vasco Leite & Sofia B.S.D. Castro & João Correia-da-Silva, 2008. "The core periphery model with asymmetric inter-regional and intra-regional trade costs," FEP Working Papers 287, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
    Other versions:
  9. Matthias Wrede, 2009. "Heterogenous Skills and Homogeneous Land: Segmentation and Agglomeration," MAGKS Papers on Economics 200922, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
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