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Technological Progress and Economic Geography

  • Takatoshi Tabuchi

    (Faculty of Economics, The University of Tokyo)

  • Jacques-François Thisse

    (CORE, Université catholique de Louvain, NRU-Higher School of Economics and CEPR)

  • Xiwei Zhu

    (Center for Research of Private Economy and School of Economics, Zhejiang University)

New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive e¢ ciency when labor productivity rises.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2014/2014cf915.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-915.

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Length: 25 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:tky:fseres:2014cf915
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