Knowledge-capital meets new economic geography

We incorporate the now standard knowledge-capital model of multinational firms in a new economic geography setting. The theoretical predictions of our model suggest that unskilled labor mobility leads to less concentration of production than skilled labor mobility does. This is in line with empirical evidence that agglomeration of production among European nations is less pronounced than among US regions. Our model shows that the different patterns in labor mobility can explain actual differences in the spreading of industries. According to our welfare analysis, trade liberalization is likely Pareto-improving for a larger (smaller) country with mobile unskilled (skilled) labor. In the supplement, we investigate the sensitivity of our results in several respects.

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Year of publication:	2005
Authors:	Egger, Peter ; Gruber, Stefan ; Larch, Mario ; Pfaffermayr, Michael
Publisher:	Munich : Center for Economic Studies and Ifo Institute (CESifo)
Subject:	Multinationales Unternehmen \| Wissen \| Neue ökonomische Geographie \| Internationale Arbeitsmobilität \| Ungelernte Arbeitskräfte \| Facharbeiter \| Kern-Peripherie-Beziehung \| Theorie \| knowledge-capital model \| new economic geography \| unskilled labor mobility \| skilled labor mobility

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Series:	CESifo Working Paper ; 1432
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	484933442 [GVK] hdl:10419/18796 [Handle]
Classification:	F23 - Multinational Firms; International Business ; F12 - Models of Trade with Imperfect Competition and Scale Economies ; R13 - General Equilibrium and Welfare Economic Analysis of Regional Economics ; R12 - Size and Spatial Distributions of Regional Economic Activity
Source:	EconStor