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Comparative Advantage and Skill Premium of Regions

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  • Kohei Nagamachi

    (Faculty of Economics, University of Tokyo)

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    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.

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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2012/2012cf868.pdf
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    Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-868.

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    Length: 31 pages
    Date of creation: Nov 2012
    Date of revision:
    Handle: RePEc:tky:fseres:2012cf868
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    1. Tomoya Mori & Alessandro Turrini, 2000. "Skills, Agglomeration and Segmentation," Development Working Papers 141, Centro Studi Luca d'Agliano, University of Milano.
    2. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
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    5. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Donald R. Davis & Jonathan I. Dingel, 2012. "A Spatial Knowledge Economy," NBER Working Papers 18188, National Bureau of Economic Research, Inc.
    8. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
    9. Volker Nocke, 2006. "A Gap for Me: Entrepreneurs and Entry," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 929-956, 09.
    10. Nathaniel Baum-Snow & Ronni Pavan, 2013. "Inequality and City Size," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1535-1548, December.
    11. Edward L. Glaeser & Matt Resseger & Kristina Tobio, 2009. "Inequality In Cities," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 617-646.
    12. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
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