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When skilled and unskilled labor are mobile: a new economic geography approach

  • Stephan Russek
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    This paper develops an analytically solvable new economic geography model of the ‘footloose entrepreneur’ class in which not only skilled labor is mobile, but also unskilled labor. Allowing unskilled labor to move freely between different regions increases the agglomeration incentive of skilled labor. Depending on the level of unskilled labor mobility, the geographical distribution of economic activity is either a ‘pitchfork’ or a ‘tomahawk’. If unskilled labor is very mobile, complete agglomeration is the only stable outcome. When trade costs are high, skilled and unskilled labor migration reinforce each other leading to agglomeration of both types of labor in the same region. For lower levels of trade cost, unskilled labor returns to its region of origin, whereas skilled labor remains concentrated.

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    File URL: http://www.bgpe.de/texte/DP/051_russek.pdf
    File Function: First version, 2008
    Download Restriction: no

    Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 051.

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    Length: 33 pages
    Date of creation: Apr 2008
    Date of revision:
    Handle: RePEc:bav:wpaper:051_russek
    Contact details of provider: Web page: http://www.bgpe.de/

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