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The Impact of Labor Markets on Emergence and Persistence of Regional Asymmetries

IZA Discussion Paper No. 248

33 Pages Posted: 11 Apr 2001 Last revised: 7 May 2025

See all articles by Eric Toulemonde

Eric Toulemonde

IZA Institute of Labor Economics; Facultés Universitaires Notre-Dame de la Paix (FUNDP) - Faculty of Economics, Management and Social Sciences

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg

Abstract

This paper investigates the impact of labor markets and economies of agglomeration on firms location. We show that the existence of a lower bound on wage (e.g. a minimum wage or a reservation wage) introduces asymmetric location of firms. Moreover, changes in that lower bound or in global product demand may induce irreversible changes in location equilibria. Asymmetries in firms location may thus emerge and persist.

Keywords: persistence, Firms location, wages

JEL Classification: J23, R30

Suggested Citation

Toulemonde, Eric and Picard, Pierre M., The Impact of Labor Markets on Emergence and Persistence of Regional Asymmetries. IZA Discussion Paper No. 248, Available at SSRN: https://ssrn.com/abstract=265625

Eric Toulemonde (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Facultés Universitaires Notre-Dame de la Paix (FUNDP) - Faculty of Economics, Management and Social Sciences ( email )

Rempart de la Vierge 8
B-5000 Namur
Belgium
+32 81 725 313 (Phone)
+32 81 724 840 (Fax)

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

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