Social Ties, Knowledge Spillovers and Regional Convergence

Albert de Vaal and Tom Gosens

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: We take the Fujita & Thisse (2003) growth-cum-geography model to investigate the implications of seeing social ties as an important reason for the generation of knowledge. Moreover, we model migration as an important channel through which the distance decay effect of cross-regional knowledge spillovers materialize. Our results show that in such a setting the full agglomeration of high-skilled workers that are engaged in R&D activities is not a straightforward outcome. The equilibrium with an equally dispersed high-skilled labour force is a stable migration equilibrium, while regions with a larger initial share of high-skilled workers will only attract more workers when migration rates are not too high. When social ties are important in generating knowledge and knowledge spillovers, the full agglomeration of high-skilled workers in one region is not at all certain. In such a case, growth is however not optimal. As such, the trade-off between reaching optimal growth and equal distribution of economic activity remains.

Pages: 23 Pages
Date: 2010-09
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