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Regions, frictions, and migrations in a model of structural transformation


  • Tombe, Trevor


Why do some regions grow faster than others? More precisely, why do rates of convergence differ? Recent research points to labour market frictions as a possible answer. This paper expands along this line by investigating how these labour market frictions interact with regional migration. Motivating this are two important observations: (1) farm-to-nonfarm labour reallocation costs have fallen, disproportionately benefiting poorer agricultural regions; and (2) migration flows vary dramatically by region, lowering (raising) marginal productivities in destination (source) regions. Using a general equilibrium model of structural transformation calibrated with US regional data over time, I find regional migration barriers magnify the income convergence effect of labour market improvements. For instance, recent research points to improved nonagricultural skills acquisition as a driver of Southern US convergence with the North. I find the strong link between labour markets and Southern convergence follows from the South’s historically extensive migration restrictions. Finally, the model captures the low convergence rates experienced by other regions, such as the US Midwest.

Suggested Citation

  • Tombe, Trevor, 2010. "Regions, frictions, and migrations in a model of structural transformation," MPRA Paper 26641, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26641

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    References listed on IDEAS

    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741 Elsevier.
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    5. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
    6. Berthold Herrendorf & James A. Schmitz & Arilton Teixeira, 2009. "Transportation and development: insights from the U.S., 1840-1860," Staff Report 425, Federal Reserve Bank of Minneapolis.
    7. Edward Glaeser & Janet Kohlhase, 2003. "Cities, regions and the decline of transport costs," Economics of Governance, Springer, vol. 83(1), pages 197-228, October.
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    9. Reto Foellmi & Josef Zweim�ller, "undated". "Structural Change and the Kaldor Facts of Economic Growth," IEW - Working Papers 111, Institute for Empirical Research in Economics - University of Zurich.
    10. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March.
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    12. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    13. Francesco Caselli & Wilbur John Coleman II, 2001. "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 584-616, June.
    14. Schwartz, Aba, 1973. "Interpreting the Effect of Distance on Migration," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1153-1169, Sept.-Oct.
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    More about this item


    structural change; regional migration; transportation costs; labour market frictions; regional convergence;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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