Factor Mobility, Economic Integration and the Location of Industry
Center for International Economic Studies Working Paper No. 130
29 Pages Posted: 21 Dec 2001
Date Written: June 2001
This paper examines the importance of factor mobility within countries for the manifestation of agglomeration and location effects emphasized in the new economic geography literature. Working with a model of trade under monopolistic competition, the relationship of factor mobility (in particular labor) to industry adjustment and relocation is developed analytically, and then illustrated with a computational example. The computational exercise involves a notional reduction in trading costs within the European Union.
Keywords: specialization, trade and development, location of industry, agglomeration
JEL Classification: F12, O12, O41
Suggested Citation: Suggested Citation