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Labor Mobility and Economic Geography

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  • Takatoshi Tabuchi

    (Faculty of Economics, Universtiy of Tokyo)

  • Jacques-Francois Thisse

    (CORE, Universite catholicque de Louvain)

Abstract

This paper investigates the impact of the heterogeneity of the labor force on the spatial distribution of activities. This goal is achieved by applying the tools of discrete choice theory to an economic geography model. We show that taste heterogeneity acts as a strong dispersion force. We also show that the relationship between the spatial distribution of the industry (the wage differential) and trade costs is smooth and inverted U-shaped. Finally, while Rawlsian equity leads to the dispersion of industry, our analysis reveals that efficiency leads to a solution close to the market outcome, although the latter is likely to involve too much agglomeration compared to the former.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2001/2001cf99.pdf
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Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-99.

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Length: 29 pages
Date of creation: Jan 2001
Date of revision:
Handle: RePEc:tky:fseres:2001cf99

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  1. Edward L. Glaeser & Jed Kolko & Albert Saiz, 2000. "Consumer City," Harvard Institute of Economic Research Working Papers 1901, Harvard - Institute of Economic Research.
  2. Keith Head & Thierry Mayer, 2004. "Non-Europe : the magnitude and causes of market fragmentation in the EU," Cahiers de la Maison des Sciences Economiques bla99004a, Université Panthéon-Sorbonne (Paris 1).
  3. T Tabuchi, 1986. "Existence and stability of city-size distribution in the gravity and logit models," Environment and Planning A, Pion Ltd, London, vol. 18(10), pages 1375-1389, October.
  4. Wheaton, William C & Shishido, Hisanobu, 1981. "Urban Concentration, Agglomeration Economies, and the Level of Economic Development," Economic Development and Cultural Change, University of Chicago Press, vol. 30(1), pages 17-30, October.
  5. Victor Ginsburgh & Yorgo Papageorgiou & Jacques-François Thisse, 1985. "On existence and stability of spatial equilibria and steady-states," ULB Institutional Repository 2013/99282, ULB -- Universite Libre de Bruxelles.
  6. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  7. Fujita, Masahisa & Tabuchi, Takatoshi, 1997. "Regional growth in postwar Japan," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 643-670, November.
  8. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  9. Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
  10. Amiti, Mary, 1998. "New Trade Theories and Industrial Location in the EU: A Survey of Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 45-53, Summer.
  11. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," The World Economy, Wiley Blackwell, vol. 21(6), pages 707-731, 08.
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