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Capital mobility and spatial inequalities in income and industrial location

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  • Dao-Zhi Zeng

    (Tohoku University)

Abstract

This paper considers how imperfect capital mobility affects spatial inequalities in income and industrial location. The framework of Takahashi et al. (2013) is applied to investigate the effects of integrating the capital market. Several new findings are obtained. First, the inequality in nominal income displays a bell-shaped relationship with falling trade costs if capital mobility is not too low. Second, keeping the trade costs fixed, the inequalities in nominal income and industrial location behave differently when the capital market is integrated. Finally, integration of the product market and integration of the capital market have different impacts on inequality in real income. This explains why empirical findings on spatial inequalities are mixed.

Suggested Citation

  • Dao-Zhi Zeng, 2016. "Capital mobility and spatial inequalities in income and industrial location," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 109-128, March.
    • Handle: RePEc:spr:joecin:v:14:y:2016:i:1:d:10.1007_s10888-015-9318-y
    DOI: 10.1007/s10888-015-9318-y
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    2. Hajime Takatsuka & Dao‐Zhi Zeng, 2022. "Mobile capital, optimal tariff, and tariff war," Review of International Economics, Wiley Blackwell, vol. 30(1), pages 166-204, February.

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