IDEAS home Printed from https://ideas.repec.org/p/van/wpaper/0325.html
   My bibliography  Save this paper

Human Capital Allocation and Policy Intervention when there is Externality in Cities

Author

Listed:
  • Neville N. Jiang

    (Department of Economics, Vanderbilt University)

  • Rui Zhao

    (University of Illinois)

Abstract

This paper studies the allocation of skilled and unskilled workers with different human capital levels between locations: city and rural area. In the city, activities are congregated thus there is externality in production. In rural area production is spread out and no externality exists. Given a distribution of workers with various human capital levels in an economy, the social optimal allocation gathers workers with higher human capital in each category in the city, which all competitive equilibria fail to achieve, As a result, any policies that keep workers with low human capital out of the city increase total output. We further demonstrate that in some cases it is necessary to impose direct and selective barrier on the rural-urban migration. However, such policy maintains the city premium for unskilled labor. Great incentives exist for illegal rural-urban labor flow.

Suggested Citation

  • Neville N. Jiang & Rui Zhao, 2003. "Human Capital Allocation and Policy Intervention when there is Externality in Cities," Vanderbilt University Department of Economics Working Papers 0325, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0325
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/VUECON/vu03-w25.pdf
    File Function: First version, 2003
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    city externalities; human capital distribution; migration;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0325. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: http://www.vanderbilt.edu/econ/wparchive/index.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.