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Comparative Advantage and Skill Premium of Regions

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  • Kohei Nagamachi

    (Faculty of Economics, University of Tokyo)

Abstract

This paper provides one explanation of why there is observed a positive correlation between skill premium and income of regions. In doing so, this paper provides a model of self-organized sorting and skill premium with a continuum of heterogeneous individuals and that of industries or tasks within a production process. It is found that the positive correlation merges through the interaction between the location-occupation choice by individuals and regional comparative advantage. The spatial equilibrium, sorting, and product differentiation play a key role in determining the way how such interaction works.

Suggested Citation

  • Kohei Nagamachi, 2012. "Comparative Advantage and Skill Premium of Regions," CIRJE F-Series CIRJE-F-868, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2012cf868
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2012/2012cf868.pdf
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