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Scale Economies, Unemployment, and Industry Agglomeration

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  • Huan Zhao

    (Jinhe Center for Economic Research, Xi'an Jiaotong University)

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    Abstract

    This paper tries to resolve the paradox raised by Corden and Findlay (1975). In this paper, it is assumed that Manufacture sector has scale economies. Both factor prices and product prices can adjust in a general equilibrium system. In a closed economy, this paper concludes that, with the expansion of capital stock both the unemployment rate and the absolute amount of unemployment will decrease. In an open economy, this paper sets up an asymmetric model, of which only one region has fixed wage rate. It will help us to investigate how the trading cost would affect the unemployment and output of the region, which may give some helpful policy implications.

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    File URL: http://128.118.178.162/eps/it/papers/0511/0511004.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series International Trade with number 0511004.

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    Length: 12 pages
    Date of creation: 09 Nov 2005
    Date of revision:
    Handle: RePEc:wpa:wuwpit:0511004

    Note: Type of Document - pdf; pages: 12
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    Web page: http://128.118.178.162

    Related research

    Keywords: fixed wage rate; unemployment; agglomeration;

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    1. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
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