 Productivity growth, industry location patterns and labor market frictionsColin Davis and Ken-ichi Hashimoto Regional Science and Urban Economics, 2022, vol. 97, issue C Abstract: This paper constructs a two-country model of international trade to study how labor market frictions affect industry location patterns, unemployment rates, and fully endogenous productivity growth. We show that when the larger country offers subsidies to labor search costs or reduces unemployment benefits, the domestic unemployment rate falls, causing greater industry concentration and faster productivity growth, but higher unemployment for the smaller country. When similar labor market policies are implemented in the smaller country, however, the resulting fall in domestic unemployment leads to lower industry concentration and slower productivity growth, while lowering unemployment in the larger country. Keywords: Labor market frictions; Industry location; Imperfect knowledge spillovers; Endogenous productivity growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:97:y:2022:i:c:s0166046222000576 DOI: 10.1016/j.regsciurbeco.2022.103817 Access Statistics for this article Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou More articles in Regional Science and Urban Economics from Elsevier |
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