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Skills, Agglomeration and Segmentation

Author

Listed:
  • Tomoya Mori

    (Institute of Economic Research, Kyoto University)

  • Alessandro Turrini

    (Department of Economics, University of Bergamo; Centro Studi Luca d´Agliano)

Abstract

We investigate the role of skill heterogeneity in explaining location patterns induced by pecuniary externalities (Krugman (1991)). In our setting, sellers with higher skills perform better in the marketplace, and their sales are larger. Selling to distant locations leads to lower sales because of both (pecuniary) transport costs and communication costs that reduce the perceived quality of goods. A symmetry-breaking result is obtained: symmetric configurations cannot be stable, and regional inequality is inevitable. The relatively more skilled choose to stay in the location with higher aggregate income and skill, while the relatively less skilled stay in the other. The model allows us to analyse the links between the extent of interregional inequality and the extent of interpersonal skill inequality.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Tomoya Mori & Alessandro Turrini, 2000. "Skills, Agglomeration and Segmentation," Development Working Papers 141, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:141
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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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