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Labor Mobility and Economic Geography

Author

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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.

Suggested Citation

  • Takatoshi Tabuchi & Jacques-Francois Thisse, 2001. "Labor Mobility and Economic Geography," CIRJE F-Series CIRJE-F-99, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2001cf99
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2001/2001cf99.pdf
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    References listed on IDEAS

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    Cited by:

    1. Martin Korpi, 2008. "Does size of local labour markets affect wage inequality? a rank-size rule of income distribution," Journal of Economic Geography, Oxford University Press, vol. 8(2), pages 211-237, March.

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