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Local trade networks and spatially persistent unemployment

  • Oomes, Nienke

This paper studies the effects of local trade networks on the spatial distribution of employment in a model that allows for effective demand externalities as well as home bias. It is shown that, if labor can be hired in continuous quantities, then the long run spatial distribution of employment is uniform, and independent of any trade network topology. When labor has binary support, however, local trade networks are found to generate spatial unemployment clusters which can persist indefinitely.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 27 (2003)
Issue (Month): 11-12 (September)
Pages: 2115-2149

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Handle: RePEc:eee:dyncon:v:27:y:2003:i:11-12:p:2115-2149
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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