Specialized consumer services cause agglomeration - A theoretical model and some implications for regional policy
This paper presents a regional economic model in which increasing returns to scale in the production of non-traded consumer services cause the agglomeration of high-skilled workers in one region. The residential choice of high-skilled individuals exerts a pecuniary externality on immobile low-skilled individuals. Therefore, the low-skilled in the periphery reach a lower utility level than those in the core. We analyze minimum wages, training, and redistributive taxation as policy instruments to promote the low-skilled in the periphery. Even if they affect one region only, all these instruments alter the interregional equilibrium and have complexly interacting effects.
|Date of creation:|
|Contact details of provider:|| Postal: Vogelpothsweg 87, D-44227 Dortmund|
Phone: +49 +231 755 3182
Fax: +49 +231 755 4375
Web page: http://www.wiso.uni-dortmund.de/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mik:wpaper:00_10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Eva Borchard)
If references are entirely missing, you can add them using this form.