Evolution of Locations, Specialisation and Factor Returns with Two Distinct Waves of Globalisation

Jang Ping Thia

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper presents an economic geography model with two differentiated sectors that exhibit weaker inter and stronger intra-industry input-output linkages. Labour is also differentiated according to skills in a hierarchy of tasks they can perform. Globalisation occurs in two distinct phases, leading to the agglomeration of an industry (manufacturing) in the first wave, which is subsequently displaced by the other industry (services) when the second wave of globalisation takes place. Because of agglomeration effects, the increase in relative endowment of a factor may increase its relative wages, leading to more inequality. Within and between nations inequality can result.

Keywords: Agglomeration; Wage Inequality; Globalisation (search for similar items in EconPapers)
JEL-codes: F02 F12 F16 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-geo and nep-ure
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