Trade, Migration and Regional Unemployment

Gino Gancia, Paolo Epifani
2003 Social Science Research Network  
A by now large literature in regional economics has greatly improved our understanding of the determinants of the observed spatial disparities in productivity. However, this literature neglects what seems to be a robust and persistent fact accompanying regional productivity differences: high productivity regions also have lower unemployment than low productivity regions. In this paper, we set out a model in the New Economic Geography (NEG)/job search tradition to explore the theoretical
more » ... theoretical determinants of this fact. We find that the same forces producing regional agglomeration and productivity differences also generate persistent unemployment disparities. Moreover, we highlight a contrast between the short-run and long-run effects of migration on regional unemployment. In particular, migration from the periphery to the core may reduce unemployment disparities in the short-run, but exacerbates them in the long-run. D 2004 Elsevier B.V. All rights reserved. JEL classification: F12; F15; F16
doi:10.2139/ssrn.859464 fatcat:omnika3b6ngqvgtlzzg3aymw64