Specialized consumer services cause agglomeration - A theoretical model and some implications for regional policy
AbstractThis paper presents a regional economic model in which increasing returns to scale in the production of non-traded consumer services cause the agglomeration of high-skilled workers in one region. The residential choice of high-skilled individuals exerts a pecuniary externality on immobile low-skilled individuals. Therefore, the low-skilled in the periphery reach a lower utility level than those in the core. We analyze minimum wages, training, and redistributive taxation as policy instruments to promote the low-skilled in the periphery. Even if they affect one region only, all these instruments alter the interregional equilibrium and have complexly interacting effects.
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Bibliographic InfoPaper provided by University of Dortmund, Department of Economics in its series Discussion Papers in Economics with number 00_10.
Length: 28 pages
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
- NEP-GEO-2006-06-17 (Economic Geography)
- NEP-URE-2006-06-17 (Urban & Real Estate Economics)
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