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Heterogeneous Skills and Homogeneous Land: Segmentation and Agglomeration

  • Matthias Wrede


    (University of Marburg)

This paper analyzes the impact of skill heterogeneity on regional patterns of production and housing in the presence of pecuniary externalities within a general-equilibrium framework assuming monopolistic competition at intermediate good markets. It shows that the interplay of heterogeneous skills and relatively homogeneous land demand triggers skill segmentation and agglomeration. The core region, being more attractive to high skilled workers, has a disproportionately large share of production at all levels of the supply chain. The paper studies the effects on segmentation and agglomeration of interregional trade in intermediate goods, attachment to home, the presence of immobile unskilled workers, various conditions at local land markets, and federal taxation.

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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200922.

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Length: 34 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:200922
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