Series: IMF Working Papers
Author(s): International Monetary Fund
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 June 2004
Keywords: Agglomeration, matching, spatial mismatch, interregional trade, trade costs, skilled workers, free trade, Models of Trade with Imperfect Competition and Scale Economies, Labor Contracts, Size and Spatial Distributions of Regional Economic Activity
We show in the context of a new economic geography model that when labor is heterogenous trade liberalization may lead to industrial agglomeration and interregional trade. Labor heterogeneity gives local monopoly p...