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On the Impact of Labor Market Matching on Regional Disparities

  • Joe Tharakan

    (University College Dublin)

  • Jean-Philippe Tropeano

    (Université Paris 1)

We propose a model where imperfect matching between firms and workers on local labor markets leads to spatial agglomeration. We show that the occurrence of spatial agglomeration depends on initial size differences in terms of both number of workers and firms. We analyse the effect of different public policies. In our setting, the effect of a higher level of human capital on regional disparities depends on whether it makes workers more mobile on the labour market or more specialised. Policies that increase workers’ interregional mobility, increase the likelihood that regions diverge. Finally, competition policy is shown to reduce regional disparities.

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File URL: http://www.ucd.ie/economics/research/papers/2002/WP02.27.pdf
File Function: First version, 2002
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Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200227.

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Length: 40 pages
Date of creation: 14 Oct 2002
Date of revision:
Handle: RePEc:ucn:wpaper:200227
Contact details of provider: Postal: UCD, Belfield, Dublin 4
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Web page: http://www.ucd.ie/economics

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  1. Picard, Pierre M. & Toulemonde, Eric, 2004. "Endogenous qualifications and firms' agglomeration," Journal of Urban Economics, Elsevier, vol. 55(3), pages 458-477, May.
  2. Benabou, Roland, 1996. "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 237-64, April.
  3. Miyagiwa, Kaz, 1991. "Scale Economies in Education and the Brain Drain Problem," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 743-59, August.
  4. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc.
  5. Douglas Staiger & Joanne Spetz & Ciaran Phibbs, 2008. "Is There Monopsony In The Labor Market? Evidence From A Natural Experiment," Working Papers 1115, Princeton University, Department of Economics, Industrial Relations Section..
  6. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  7. Reichlin, Pietro & Rustichini, Aldo, 1998. "Diverging patterns with endogenous labor migration," Journal of Economic Dynamics and Control, Elsevier, vol. 22(5), pages 703-728, May.
  8. Ottaviano, Gianmarco & Thisse, Jacques-François, 1998. "Agglomeration and Trade Revisited," CEPR Discussion Papers 1903, C.E.P.R. Discussion Papers.
  9. BELLEFLAMME, Paul & PICARD, Pierre & THISSE, Jacques-François, . "An economic theory of regional clusters," CORE Discussion Papers RP -1464, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Papageorgiou, Y.Y. & Thisse, J.-F., . "Agglomeration as spatial interdependence between firms and households," CORE Discussion Papers RP -668, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Venables, Anthony J, 1996. "Localization of Industry and Trade Performance," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 52-60, Autumn.
  12. Fujita, Masahisa & Thisse, Jacques-François, 1996. "Economics of Agglomeration," CEPR Discussion Papers 1344, C.E.P.R. Discussion Papers.
  13. Hamilton, Jonathan & Thisse, Jacques-Francois & Zenou, Yves, 2000. "Wage Competition with Heterogeneous Workers and Firms," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 453-72, July.
  14. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
  15. Kats, Amoz, 1995. "More on Hotelling's stability in competition," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 89-93, March.
  16. Martin, Philippe, 1998. "Public Policies, Regional Inequalities and Growth," CEPR Discussion Papers 1841, C.E.P.R. Discussion Papers.
  17. Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
  18. André Sapir & Richard Baldwin & Daniel Cohen & Anthony Venables, 1999. "Market integration, regionalism and the global economy," ULB Institutional Repository 2013/8074, ULB -- Universite Libre de Bruxelles.
  19. Chiara Bentivogli & Patrizio Pagano, 1999. "Regional Disparities and Labour Mobility: the Euro-11 versus the USA," LABOUR, CEIS, vol. 13(3), pages 737-760, 09.
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