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Title:Knowledge-capital meets new economic geography PDF Logo
Authors:Egger, Peter
Gruber, Stefan
Larch, Mario
Pfaffermayr, Michael
Issue Date:2005
Series/Report no.:CESifo working papers 1432
Abstract:We incorporate the now standard knowledge-capital model of multinational firms in a new economic geography setting. The theoretical predictions of our model suggest that unskilled labor mobility leads to less concentration of production than skilled labor mobility does. This is in line with empirical evidence that agglomeration of production among European nations is less pronounced than among US regions. Our model shows that the different patterns in labor mobility can explain actual differences in the spreading of industries. According to our welfare analysis, trade liberalization is likely Pareto-improving for a larger (smaller) country with mobile unskilled (skilled) labor. In the supplement, we investigate the sensitivity of our results in several respects.
Subjects:knowledge-capital model
new economic geography
unskilled labor mobility
skilled labor mobility
JEL:F23
F12
R13
R12
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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