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

    References listed on IDEAS

    as
    1. Collins, William J. & Margo, Robert A., 2000. "Residential segregation and socioeconomic outcomes: When did ghettos go bad?," Economics Letters, Elsevier, vol. 69(2), pages 239-243, November.
    2. repec:cup:apsrev:v:67:y:1973:i:01:p:11-28_14 is not listed on IDEAS
    3. Collins, William J. & Margo, Robert A., 2003. "Race and the value of owner-occupied housing, 1940-1990," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 255-286, May.
    4. Charles Brown, 1984. "Black-White Earnings Ratios Since the Civil Rights Act of 1964: The Importance of Labor Market Dropouts," The Quarterly Journal of Economics, Oxford University Press, vol. 99(1), pages 31-44.
    5. William Poole, 2001. "Expectations," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 1-10.
    6. Edward L. Glaeser & Joseph Gyourko, 2005. "Urban Decline and Durable Housing," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 345-375, April.
    7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    8. DiPasquale, Denise & Glaeser, Edward L., 1998. "The Los Angeles Riot and the Economics of Urban Unrest," Journal of Urban Economics, Elsevier, vol. 43(1), pages 52-78, January.
    9. David M. Cutler & Edward L. Glaeser, 1997. "Are Ghettos Good or Bad?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 827-872.
    10. Amitabh Chandra, 2000. "Labor-Market Dropouts and the Racial Wage Gap: 1940-1990," American Economic Review, American Economic Association, vol. 90(2), pages 333-338, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    city externalities; human capital distribution; migration;

    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.

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

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.