Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force



increases the productivity of each worker by means of a knowledge diffusion process. In the
model the skill premium is endogenous and increasing in the regional quota of high-skilled
workers.5

We analyse the migration behaviour of low and high-skilled workers in a process of
regional economic integration. At a given level of trade costs, due to the productivity
premium associated with the high-skilled matching in one region, this type of workers will be
more willing to migrate than low-skilled ones. The results of the paper show the existence of
a range of trade costs for which only high-skilled workers have an incentive to migrate.
Therefore introducing labour heterogeneity in the basic core-periphery model enables us to
explain one of the most striking features of interregional migration patterns: the positive self-
selection of the migrants. Another important implication of the model is the existence of a
persistent wage and productivity differential between the core and peripheral regions, a result
which is supported by a recent strand of empirical literature.

The paper is organized as follows. In section 2, we present recent empirical evidence on
agglomeration and human capital externalities. Section 3 develops the model. In Section 4 we
examine the possible spatial equilibria and their features. Section 5 concludes.

5

According to Glaeser (1998), firms choose to locate in cities and pay the higher wages and suffer congestion
costs because workers in cities are more productive: "...if workers weren't more productive firms would leave
cities altogether and hire elsewhere. Since the urban wage premium appears to be a centuries-old phenomenon,
we must assume that over the long run, firms are quite willing to pay these higher wages".



More intriguing information

1. Modelling the Effects of Public Support to Small Firms in the UK - Paradise Gained?
2. Developing vocational practice in the jewelry sector through the incubation of a new ‘project-object’
3. The name is absent
4. The name is absent
5. The name is absent
6. Trade Liberalization, Firm Performance and Labour Market Outcomes in the Developing World: What Can We Learn from Micro-LevelData?
7. The name is absent
8. Macro-regional evaluation of the Structural Funds using the HERMIN modelling framework
9. Solidaristic Wage Bargaining
10. Rent Dissipation in Chartered Recreational Fishing: Inside the Black Box
11. Integrating the Structural Auction Approach and Traditional Measures of Market Power
12. Examining the Regional Aspect of Foreign Direct Investment to Developing Countries
13. The name is absent
14. EXECUTIVE SUMMARIES
15. The name is absent
16. Towards Teaching a Robot to Count Objects
17. The name is absent
18. The name is absent
19. National urban policy responses in the European Union: Towards a European urban policy?
20. The name is absent