Increasing returns in matching between skilled workers and firms create a local thick-market externality when labour markets are geographically segmented. This generates an agglomeration force that can offset the dispersion force due to local competition in a segmented product market. When this is the case, only some regions specialize in high-skill productions while others are caught in a low-skill trap.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
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Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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Glaeser, Edward L & Mare, David C, 2001.
"Cities and Skills,"
Journal of Labor Economics,
University of Chicago Press, vol. 19(2), pages 316-42, April.
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Glaeser, E.L. & Mare, D.C., 1994.
"Cities and Skills,"
Papers
e-94-11, Stanford - Hoover Institution.
Edward L. Glaeser & David C. Mare, 1994.
"Cities and Skills,"
NBER Working Papers
4728, National Bureau of Economic Research, Inc.
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