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Heterogeneous skills and homogeneous land: Segmentation and agglomeration

Matthias Wrede ()

No 04/2012, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: This paper analyzes the effect of skill heterogeneity on regional patterns of production and housing in the presence of pecuniary externalities within a general-equilibrium framework, assuming monopolistic competition in intermediate goods markets. It shows that the interplay of heterogeneous skills and comparatively homogeneous land demand triggers skill segmentation and agglomeration. The core region that is more attractive to high skilled workers has a disproportionately large share of production at all levels of the supply chain. The paper extensively discusses welfare increasing tax policies. This paper also briefly studies how trade in intermediate goods and endogenous land demand affect segmentation and agglomeration.

Keywords: skill heterogeneity; land use; sorting; agglomeration (search for similar items in EconPapers)
JEL-codes: R12 R13 R14 H22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2012
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Related works:
Journal Article: Heterogeneous skills and homogeneous land: segmentation and agglomeration (2013) Downloads
Working Paper: Heterogeneous Skills and Homogeneous Land: Segmentation and Agglomeration (2009) Downloads
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