Interregional income redistribution and convergence in a model with perfect capital mobility and unionized labor markets

Bonatti, Luigi (2002) Interregional income redistribution and convergence in a model with perfect capital mobility and unionized labor markets. UNSPECIFIED. (Unpublished)

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    Abstract

    The model presents a general equilibrium dynamic model of an economy consisting of many regions. Capital is perfectly mobile and labor is immobile across regions. Wages are determined by local unions. There is training on the job and strategic complementarity between investment in physical capital by firms and investment in becoming “trainable” by workers. Structurally similar regional economies preserve forever their differences in per capita output and employment rate, if the workers’ non-labor is equalized across regions by interregional income redistribution operated via central budget. Regional decentralization of income redistribution allows convergence in per capita output and employment rate.

    Item Type: Departmental Technical Report
    Department or Research center: Economics
    Subjects: H Social Sciences > HD Industries. Land use. Labor > HD4801 Labor
    Uncontrolled Keywords: Growth - on-the-job training - skilled labor - strategic complementarity - fiscal transfers
    Report Number: 2
    Repository staff approval on: 21 Jan 2003

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