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Human Capital, Local Labor Markets and Regional Interaction

  • Laurence Rioux

    (INSEE)

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    This paper investigates the impact of regional integration on the incentives for local governments to finance general human capital in a context of oligopsonistic labor markets, where firm's specific skills are obtained through specific training. General human capital increases both a worker's productivity (productivity effect) and its ability to learn new firm's specific skills (flexibility effect). For symmetric regions, integration leads to a ''race to the top'' or to a '' race to the bottom'' in local public educational policies depending on whether the productivit effect dominates or not the flexibility effect. The paper discusses also the effects of integration on regional wages, intra-regional wage inequalities and integration between regions different in size or productivity.

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    File URL: http://fmwww.bc.edu/RePEc/es2000/1740.pdf
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    Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1740.

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    Date of creation: 01 Aug 2000
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    Handle: RePEc:ecm:wc2000:1740
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    1. Wilson, John Douglas, 1991. "Tax competition with interregional differences in factor endowments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 423-451, November.
    2. Kim, Sunwoong, 1989. "Labor Specialization and the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 692-705, June.
    3. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
    4. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
    5. Jellal, Mohamed & Thisse, Jacques-François & Zenou, Yves, 2005. "Demand uncertainty mismatch and (un)employment," MPRA Paper 38437, University Library of Munich, Germany.
    6. John Kennan & Raymond Riezman, 2013. "Do Big Countries Win Tariff Wars?," World Scientific Book Chapters, in: International Trade Agreements and Political Economy, chapter 4, pages 45-51 World Scientific Publishing Co. Pte. Ltd..
    7. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
    8. Jong-Il Kim & Lawrence J. Lau, 1996. "The sources of Asian Pacific economic growth," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 448-54, April.
    9. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
    10. Yves Zenou & Jacques-François Thisse, 1995. "Appariement et concurrence spatiale sur le marché du travail," Revue Économique, Programme National Persée, vol. 46(3), pages 615-624.
    11. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    12. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
    13. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
    14. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
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