Discussion paper

DP3324 Spatial Mismatch and Skill Accumulation

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.


Ottaviano, G and P Monfort (eds) (2002), “DP3324 Spatial Mismatch and Skill Accumulation”, CEPR Press Discussion Paper No. 3324. https://cepr.org/publications/dp3324