Modelling Agglomeration and Dispersion in Space: The Role of Labour Migration, Capital Mobility and Vertical Linkages

In this paper we numerically investigate the role played by the capital mobility, the labour migration and input-output linkages in shaping the spatial distribution of the economic activity in a spatial computable general equilibrium framework. We identify EU core and periphery regions based on an accessibility index and simulate the impact of a homogeneous transport shock. Our results suggest that agglomeration patterns are magnified by the labour and capital mobility, the latter exerting a stronger influence than the former. Results are more nuanced for vertical linkages, which are associated with more agglomeration in terms of the GDP, but more dispersion in terms of the number of firms and the labour demand. These results shed an additional light on location mechanisms in applied general equilibrium applications of new economic geography models and complement the theoretical literature on this subject based on analytically solvable models.

DI COMITE Francesco;  KANCS D'Artis;  LECCA Patrizio; 

2017-10-05

WILEY-BLACKWELL

JRC104037

0965-7576,   

http://onlinelibrary.wiley.com/doi/10.1111/roie.12313/full,    https://publications.jrc.ec.europa.eu/repository/handle/JRC104037,   

10.1111/roie.12313,