Acquisition of skills, education subsidies, and agglomeration of firms

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 939

Classification and Topics

• Classification: Wirtschaft ; Trade Unions: Objectives, Structure, and Effects ; Size and Spatial Distributions of Regional Economic Activity ; Economic Integration ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
• Subject: economic geography ; education ; subsidies ; Neue ökonomische Geographie ; Bildungsinvestition ; Bildungsfinanzierung ; Subvention ; Transportkosten ; Regionale Konzentration ; Standorttheorie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Toulemonde, Eric
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/20176
• Last update: 10.03.2025, 11:43 AM CET