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

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  • Stephan Russek

Abstract

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.

Suggested Citation

  • Stephan Russek, 2008. "When skilled and unskilled labor are mobile: a new economic geography approach," Working Papers 051, Bavarian Graduate Program in Economics (BGPE).
    • Handle: RePEc:bav:wpaper:051_russek
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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