Working Paper: CEPR ID: DP3324
Authors: Philippe Monfort; Gianmarco I.P. Ottaviano
Abstract: 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.
Keywords: Agglomeration; Dual Labour Markets; Skill Accumulation; Spatial Mismatch
JEL Codes: F12; L13; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local labor market conditions (J29) | skill accumulation behavior of workers (J24) |
| skill accumulation behavior of workers (J24) | geographical disparities in high-skill job opportunities (R23) |
| geographical disparities in high-skill job opportunities (R23) | low-skill bad-job trap (F66) |
| availability of a skilled workforce (J24) | firm location decisions (R30) |
| firm location decisions (R30) | availability of a skilled workforce (J24) |
| density of skilled workers (J69) | firm vacancies (G24) |
| firm vacancies (G24) | density of skilled workers (J69) |