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Endogenous mobility, human capital and trade


  • Istvan Konya

    () (Boston College
    Boston College)


The paper presents a model that can explain how regional differences emerge in a country as a consequence of foreign trade. The model is based on the widely used increasing returns/transportation costs framework. In addition to the conventional elements, heterogeneous households and imperfect labor mobility are added. The results indicate that for a small economy international trade leads to human capital reallocation, and thus more regional inequality than without labor heterogeneity. Even small migration ows can lead to large inequalities in per capita incomes, if the most skilled workers move. The model also sheds some light on the relative importance of fundamentals and historical factors.

Suggested Citation

  • Istvan Konya, 2001. "Endogenous mobility, human capital and trade," Boston College Working Papers in Economics 528, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:528

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    References listed on IDEAS

    1. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
    2. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," NBER Working Papers 6849, National Bureau of Economic Research, Inc.
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    4. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    5. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," Harvard Institute of Economic Research Working Papers 1856, Harvard - Institute of Economic Research.
    6. repec:hhs:iuiwop:430 is not listed on IDEAS
    7. Peter H. Lindert & Jeffrey G. Williamson, 2003. "Does Globalization Make the World More Unequal?," NBER Chapters,in: Globalization in Historical Perspective, pages 227-276 National Bureau of Economic Research, Inc.
    8. Donald R. Davis & David E. Weinstein, 2002. "Bones, Bombs, and Break Points: The Geography of Economic Activity," American Economic Review, American Economic Association, vol. 92(5), pages 1269-1289, December.
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    Cited by:

    1. Rodriguez-Pose, Andres & Gill, Nicholas, 2006. "How does trade affect regional disparities?," World Development, Elsevier, vol. 34(7), pages 1201-1222, July.

    More about this item


    Migration; human capital; regional inequalities;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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