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Increasing Returns and Spatial Unemployment Disparities

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Abstract

Standard models of the new trade and location theories usually assume full employment and are thus ill-equipped to study spatial unemployment differences, which in reality are more pronounced that income disparities. Regional labour market theories like the ´wage curve´-approach on the other hand can not endogenously explain the origin of regional economic disparities. We analyse regional agglomeration and regional unemployment in an unified approach by combining a wage curve with an increasing returns technology. We find that regional unemployment rates closely resemble the coreperiphery structure of regional GDP per capita. This matches the stylised facts from EU-15.

Suggested Citation

  • Jens Südekum, 2003. "Increasing Returns and Spatial Unemployment Disparities," Departmental Discussion Papers 117, University of Goettingen, Department of Economics.
    • Handle: RePEc:got:vwldps:117
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    More about this item

    Keywords

    Regional Unemployment; Economic Geography; Increasing Returns; Wage Curve; Migration; Labor Mobility;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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