Resource title

Acquisition of skills, education subsidies, and agglomeration of firms

Resource image

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Resource description

An analytically solvable model of new economic geography is developed. Acquisition of skills is costly for workers but it allows them to earn wages that are larger than those of the unskilled. Moreover, skills acquisition can be subsidized by a regional government. For large transport costs, firms spread more or less evenly between regions, their precise location being determined by the level of education subsidies. For low transport costs, firms agglomerate in one region. We also identify equilibria with partial agglomeration of firms. Finally, we show that the incentives to subsidy education largely depend on the level of transport costs.

Resource author

Eric Toulemonde

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/20176

Resource license

Adapt according to the presented license agreement and reference the original author.