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Locational signaling and agglomeration

Marcus Berliant () and Chia-Ming Yu

MPRA Paper from University Library of Munich, Germany

Abstract: Agglomeration can be caused by asymmetric information and a locational signaling effect: The location choice of workers signals their productivity to potential employers. The cost of a signal is the cost of housing at that location. When workers' marginal willingness to pay for housing is negatively correlated with their productivity, skill-biased technological change causes a core-periphery equilibrium where only the core-periphery (partially stratified) equilibria are stable. When workers' marginal willingness to pay for housing and their productivity are positively correlated, skill-biased technological improvements will never result in a core-periphery equilibrium. Location can at best be an approximate rather than a precise sieve for high-skill workers.

Keywords: Agglomeration; Adverse Selection; Asymmetric Information; Locational Signaling (search for similar items in EconPapers)
JEL-codes: R13 D82 D51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-geo and nep-ure
Date: 2012-10-08
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Related works:
Journal Article: LOCATIONAL SIGNALING AND AGGLOMERATION (2015) Downloads
Working Paper: Locational signaling and agglomeration (2014) Downloads
Working Paper: Locational signaling and agglomeration (2010) Downloads
Working Paper: Locational signaling and agglomeration (2009) Downloads
Working Paper: Locational signaling and agglomeration (2009) Downloads
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