DP3324 Spatial Mismatch and Skill Accumulation

Author(s):	Philippe Monfort, Gianmarco Ottaviano
Publication Date:	April 2002
Keyword(s):	agglomeration, dual labour markets, skill accumulation, spatial mismatch
JEL(s):	F12, L13, R13
Programme Areas:	International Trade and Regional Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=3324

Increasing returns in matching between skilled workers and firms create a local thick-market externality when labour markets are geographically segmented. This generates an agglomeration force that can offset the dispersion force due to local competition in a segmented product market. When this is the case, only some regions specialize in high-skill productions while others are caught in a low-skill trap.