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Trade and industrial location with heterogeneous labor

Amiti, Mary and Pissarides, Christopher (2005) Trade and industrial location with heterogeneous labor. Journal of International Economics, 67 (2). pp. 392-412. ISSN 0022-1996

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Identification Number: 10.1016/j.jinteco.2004.09.010


We show in the context of a new economic geography model that when labor is heterogenous trade liberalization may lead to industrial agglomeration and inter-regional trade. Labor heterogeneity gives local monopoly power to firms but also introduces variations in the quality of the job match. Matches are likely to be better when there are more firms and workers in the local market, giving rise to an agglomeration force which can offset the forces against, trade costs and the erosion of monopoly power. We derive analytically a robust agglomeration equilibrium and illustrate its properties with numerical simulations.

Item Type: Article
Official URL:
Additional Information: © 2005 Elsevier
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Date Deposited: 27 Jun 2007
Last Modified: 01 Oct 2010 08:47

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