Abstract
This paper investigates the impact of regional integration on the incentives for local governments to finance general human capital in a context of oligopsonistic labor markets, where firm’s specific skills are obtained through specific training. General human capital increases both a worker’s productivity (productivity effect) and its ability to learn new firm’s specific skills (flexibility effect). For symmetric regions, integration leads to a “race to the top” or to a “race to the bottom” in local public educational policies depending on whether the productivity effect dominates or not the flexibility effect. The paper discusses also the effects of integration on regional wages, intra-regional wage inequalities and integration between regions different in size or productivity.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Becker G. (1964). Human Capital. Columbia University Press.
Bucovetsky S. (1991). Asymmetric tax competition. Journal of Urban Economics, 21:333–350.
Hashimoto M. (1981). Firm specific human capital as a shared investment. American Economic Review, 71:475–482.
Jellal M., Thisse J.-F. and Zenou Y. (1997). Demand uncertainty, mismatch and (un)employment, mimeo CORE.
Jovanovic B. (1979a). Job matching and the theory of turnover. Journal of Political Economy, 87:972–990.
Jovanovic B. (1979b). Firm specific capital and the theory of turnover. Journal of Political Economy, 87:1246–1260.
Kennan J. and Riezman R. (1988). Do big countries win tariff wars? International Economic Review, 29:81–85.
Kim S. (1989). Labor specialization and the extent of the market. Journal of Political Economy, 97:692–705.
Kremer M. (1993). The O-Ring theory of economic development. Quarterly Journal of Economics, 108:551–576.
Mieszkowski P. and Zodrow G. (1986). Pigou, Tiebout, property taxation, and the underprovision of local public goods. Journal of Urban Economics, 19:356–370.
OECD (1998) Education at a glance: OECD Indicators.
Salop S. (1979). Monopolistic competition with outside goods. Bell Journal of Economics, 10:141–156.
Stevens M. (1994). A theoretical model of on-the-job training with imperfect competition. Oxford Economic Papers, 46:537–562.
Thisse J.-F. and Zenou Y. (1995). Appariement et concurrence spatiale sur le marché du travail. Revue Économique, 46:615–624.
Thisse J.-F. and Zenou Y. (1996). How to finance education when the labor force is heterogeneous? mimeo CORE.
Wildasin D. (1988). Nash equilibria in models of fiscal competition. Journal of Public Economics, 35:229–240.
Wildasin D. (1989). Interjuridictional capital mobility: fiscal externality and a corrective subsidy. Journal of Urban Economics, 25:193–212.
Wilson J. (1986). A theory of interregional tax competition. Journal of Urban Economics, 19:296–315.
Wilson J. (1991). Tax competition with interregional differences in factor endowments. Regional Science and Urban Economics, 21:423–451.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2002 Springer Science+Business Media New York
About this chapter
Cite this chapter
Rioux, L., Verdier, T. (2002). Human Capital, Local Labor Markets and Regional Integration. In: Hairault, JO., Kempf, H. (eds) Market Imperfections and Macroeconomic Dynamics. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-3598-7_2
Download citation
DOI: https://doi.org/10.1007/978-1-4757-3598-7_2
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4903-5
Online ISBN: 978-1-4757-3598-7
eBook Packages: Springer Book Archive