Integration, Mobility, and Human Capital Formation
In this note, we show that labour market integration can be a double-edged sword. In the presence of local human capital externalities, integration and the ensuing agglomeration of skilled labour can cause a decline in human capital and the total wage sum (net of education costs). In particular, integration depresses the incentives for some talented but immobile individuals to become skilled.
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"Resisting economic integration when industry location is uncertain,"
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