Abstract:
This paper attempts to explain the current de-concentration of manufacturing on the larger urban areas and the parallel movement of concentration of business services. The results point out that the larger agglomerations are not loosing their power of attraction given the decrease on transport costs and on information transmission. Although there is a weak evidence of a decrease in transport costs, the higher density of high skill workers is still relevant to the attraction of business services and part of the manufacturing firms to the larger urban agglomerations. The business services are more interested in the high skill workers on the top of the occupational hierarchy while the manufacturing industry is interested in any skilled worker. It is also observed that the gains due to the concentration in the same industry (business services) are higher than the gains from the concentration of worker from another industry.
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