Interregional Income Redistribution and Convergence in a Model with Perfect Capital Mobility and Unionized Labor Markets
The model presents a general equilibrium dynamic model of an economy consisting of many regions. Capital is perfectly mobile and labor is immobile across regions. Wages are determined by local unions. There is training on the job and strategic complementarity between investment in physical capital by firms and investment in becoming “trainable’’ by workers. Structurally similar regional economies preserve forever their differences in per capita output and employment rate, if the workers’ non-labor income is equalized across regions by interregional income redistribution operated via central budget. Regional decentralization of income redistribution allows convergence in per capita output and employment rate. Copyright Springer Science + Business Media, Inc. 2005
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Volume (Year): 12 (2005)
Issue (Month): 3 (May)
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Decressin, Jorg & Fatas, Antonio, 1995.
"Regional labor market dynamics in Europe,"
European Economic Review,
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- Luigi Bonatti, 2002. "Interregional income redistribution and convergence in a model with perfect capital mobility and unionized labor markets," Department of Economics Working Papers 0202, Department of Economics, University of Trento, Italia. Full references (including those not matched with items on IDEAS)
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