Trade and industrial location with heterogeneous labor

Mary Amiti and Christopher Pissarides

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We show in the context of a new economic geography model that when labor is heterogenous trade liberalization may lead to industrial agglomeration and inter-regional trade. Labor heterogeneity gives local monopoly power to firms but also introduces variations in the quality of the job match. Matches are likely to be better when there are more firms and workers in the local market, giving rise to an agglomeration force which can offset the forces against, trade costs and the erosion of monopoly power. We derive analytically a robust agglomeration equilibrium and illustrate its properties with numerical simulations.

Keywords: agglomeration; matching; spatial mismatch; inter-regional trade (search for similar items in EconPapers)
JEL-codes: F12 J41 R12 R13 (search for similar items in EconPapers)
Date: 2005-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

Published in Journal of International Economics, December, 2005, 67(2), pp. 392-412. ISSN: 0022-1996

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Related works:
Journal Article: Trade and industrial location with heterogeneous labor (2005)
Working Paper: Trade and Industrial Location with Heterogeneous Labor (2002)
Working Paper: Trade and Industrial Location with Heterogenous Labour (2002)
Working Paper: Trade and industrial location with heterogeneous labor (2002)
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