We present a model where long-run growth and industrial location are jointly endogenous by introducing Romerian product innovation growth into Krugman's core-periphery model. We focus on stability, showing that growth is a powerful centripetal force, but that knowledge spillovers are a powerful...

A two-sector model with sector-dependent disability risks is presented. Working in the low-risk sector requires skills that can be obtained by investments in education. Moral hazard precludes full insurance. The labour force allocation is responsive to the incentives created by a social...