Technological Progress and Economic Geography

Jacques Thisse, Takatoshi Tabuchi and Xiwei Zhu

No 9901, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive efficiency when labor productivity rises.

Keywords: New economic geography; Technological progress; Labor productivity; Migration costs; Labor heterogeneity (search for similar items in EconPapers)
JEL-codes: J61 R12 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-eff, nep-geo, nep-gro, nep-mig and nep-ure
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