Forslid, Rikard; Okubo, Toshihiro - Nationalekonomiska institutionen, Stockholms Universitet - 2010
The present paper focuses on sorting as a mechanism behind the well-established fact that there is a central region productivity premium. Using a model of heterogeneous firms that can move between regions, Baldwin and Okubo (2006) show how more productive firms sort themselves to the large core...