|
| |
N°108 |
|
| Issue 4 2006 |
| Divergence, Wage-Gap and Geography |
| Frédéric Andres |
|
| We develop a geographic growth model where nominal wages are allowed to diverge between the two considered countries. Removing the standard assumption entailing that both countries always own a traditional sector, we argue that, as trade gets freer, the traditional sector of one country might cease to exist so that wages increase: it gives rise to an additional dispersion force independent of trade costs. Hence, the core-periphery outcome might never be reached, which contradicts previous literature’s results. We also question a hallmark of the literature since we argue that full agglomeration of firms might actually lead to slower growth for both countries. |
Abstract
Full Text |
| |
|
| Wage Differential; New Economic Geography; Endogenous Growth; Knowledge Spillovers |
Keywords |
| F15; O41; R11 |
JEL classification |
|
Order form |
|
