Agglomeration and population ageing in a two region model of exogenous growth

Theresa Grafeneder-Weissteiner and Klaus Prettner

No 901, VID Working Papers from Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna

Abstract: This article investigates the effects of introducing demography into the New Economic Geography. We generalize the constructed capital approach, which relies on infinite individual planning horizons, by introducing mortality. The resulting overlapping generation framework with heterogeneous individuals allows us to study the effects of ageing on agglomeration processes by analytically identifying the level of trade costs that triggers catastrophic agglomeration. Interestingly, this threshold value is rather sensitive to changes in mortality. In particular, the introduction of a positive mortality rate makes the symmetric equilibrium more stable and therefore counteracts agglomeration tendencies. In sharp contrast to other New Economic Geography approaches, this implies that deeper integration is not necessarily associated with higher interregional inequality.

Keywords: Agglomeration; New Economic Geography; Trade and Growth; Constructed Capital Model; Population Ageing. (search for similar items in EconPapers)
JEL-codes: C61 F12 F15 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-05
New Economics Papers: this item is included in nep-fdg, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.oeaw.ac.at/fileadmin/subsites/Institut ... Papers/WP2009_01.pdf

Related works:
Working Paper: Agglomeration and population aging in a two region model of exogenous growth (2009)
Working Paper: Agglomeration and population aging in a two region model of exogenous growth (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vid:wpaper:0901

Access Statistics for this paper

More papers in VID Working Papers from Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna
Bibliographic data for series maintained by Bernhard Rengs ().