Technological Progress and Economic Geography

27 Pages Posted: 2 Jun 2014

See all articles by Takatoshi Tabuchi

Takatoshi Tabuchi

University of Tokyo - Faculty of Economics

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Xiwei Zhu

Zhejiang University - Center for Research of Private Economy (CRPE)

Date Written: March 2014

Abstract

New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive efficiency when labor productivity rises.

Keywords: labor heterogeneity, labor productivity, migration costs, new economic geography, technological progress

JEL Classification: J61, R12

Suggested Citation

Tabuchi, Takatoshi and Thisse, Jacques-François and Zhu, Xiwei, Technological Progress and Economic Geography (March 2014). CEPR Discussion Paper No. DP9901. Available at SSRN: https://ssrn.com/abstract=2444923

Takatoshi Tabuchi (Contact Author)

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan
+81 3 5841 5603 (Phone)
+81 3 5841 5521 (Fax)

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Xiwei Zhu

Zhejiang University - Center for Research of Private Economy (CRPE) ( email )

Hangzhou, Zhejiang 310027
China

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