Abstract In this paper, we develop a three‐region economic geography model with workers of heterogeneous skills and mobility rates to consider how first‐nature, regional differences impact both inter‐ and intraregional inequality. In our model, the skill premium within a region summarizes both the degree of intraregional inequality between mobile, skilled workers and immobile, unskilled workers and the interregional inequality through differences in the welfare of unskilled workers across regions. Regions with the highest skill premium have the greatest degree of intraregional inequality and provide the lowest level of welfare to unskilled workers, relative to other regions. We find that the skill premium will be higher in regions with a greater supply of unskilled labor, lower supply of housing, or are more remote. An increase in a region's housing supply or centrality will lower intraregional inequality and raise the welfare of the local, unskilled workforce. However, the magnitude of these changes are declining in the initial number of skilled workers in the region. The model is extended to consider imperfectly elastic housing supply. The larger the price elasticity of housing, the larger the range of values, such that more populated regions will host a disproportionate share of skilled workers, have lower levels of intraregional inequality, and provide higher levels of welfare for unskilled workers.

Abstract This paper incorporates the variable elasticity of substitution preferences in the variety expansion model developed by Grossman and Helpman [ (1991) Innovation and Growth in the Global Economy, MIT Press]. There exists a balanced growth path when the elasticity of substitution is constant with knowledge spillover. When the elasticity of substitution is variable and the knowledge spillover is sufficiently small, a unique and stable steady state exists. When the knowledge spillover is sufficiently large, the steady state is unique and unstable. When the size of the knowledge externality is moderate, multiple equilibria exist.

This study presents a two-country model of subsidy competition for manufacturing firms under labor market imperfections. Because subsidies affect the distribution of firms, subsidies influence unemployment rates and welfare in both countries. We show that when labor market frictions are high, subsidy competition is beneficial, although subsidies under subsidy competition are inefficiently high. In the coordinated equilibrium, the supranational authority provides a subsidy to firms that equal the expected total search costs, which increases the number of firms relative to laissez-faire and improves welfare relative to laissez-faire and subsidy competition. Finally, we find that a rise in a country's labor market frictions raises the equilibrium subsidy rate, affects unemployment rates, and lowers welfare.

This study analyzes the interplay between the agglomeration of economic activities and interregional differences in working hours, which are typically longer in large cities, as they are normally more developed than small cities. For this purpose, we develop a two-region model with endogenous labor supply. Although we assume a symmetric distribution of immobile workers, the symmetric equilibrium breaks in the sense that firms may agglomerate when trade costs are intermediate and labor supply is elastic. We also show that the price index is always lower, while labor supply, per capita income, real wages, and welfare are always higher in the more agglomerated region.

We construct an international trade model with an elastic labor supply and analyze the impacts of technological progress on the equilibrium outcomes of working hours and economic welfare. We show that the labor supply is inverted U-shaped with respect to technological progress. We also show that welfare is U-shaped with respect to trade costs whereas welfare and technological progress are positively related. We then show that working hours in developed countries are longer in the first stages of development, but shorter in the second stages of development.

This article examines the effects of globalization, by especially focusing on the relaxation of local equity requirements (LERs) in developing countries. By constructing an endogenous growth model, where profit leakage to the South through LERs plays a key role, we obtain the following results. First, the relaxation of LERs in the South drives the relocation of firms from the North to the South, yielding a U-shaped growth rate. Second, our numerical simulations suggest that a sufficient relaxation of LERs is beneficial for the South, although the shared profit of joint ventures is maximized through the use of LERs.

We construct an overlapping generation model with human capital accumulation to analyze the effect of human capital level on foreign direct investment (FDI) in a small open developing country. In particular, we assume that manufactured goods have the human capital intensive technology and young agents choose whether to work or to educate themselves. When the human capital level in the developing country is sufficiently small, manufactured goods firms do not conduct FDI and the economy in the developing country is trapped in poverty. If the government of the developing country levies a tariff on the imports of manufactured goods, manufacturers conduct FDI, and the economy in the developing country can escape from the poverty trap.

In this paper, to investigate how an increase in the price of natural resources affects the level of technology, we develop an endogenous variety expansion model of a small open economy based on that of Grossman and Helpman (1991, Ch. 3). We conclude that an increase in the price of natural resources has a neutral effect on the level of technology in the long run. (C) 2013 Elsevier B.V. All rights reserved.

This paper constructs a North-South endogenous growth model to investigate how the organizational forms of final goods firms evolve. Initially, the final goods firms in the North obtain intermediate goods from Northern firms and produce in the North. When trade costs are sufficiently low, as the economy develops, the final goods firms produce the final goods in the North and obtain the intermediate goods from Southern firms. As the economy develops further, they produce the final goods in the South and obtain intermediate goods from Southern firms. (C) 2012 Elsevier Inc. All rights reserved.

This paper constructs a two-country model in which oligopolistic firms export goods and undertake cost-reducing R&D investment. Each country imposes tariffs. A decrease in the tariff rates in both countries decreases cost-reducing R&D investment.

This paper constructs a North-South endogenous growth model where final good producers in the North determine whether they outsource the production of intermediate goods to the South or not. When the final good producers outsource the production of intermediate goods to the Northern firms, the price of intermediate goods is high, whereas the cost of outsourcing is low. On the other hand, when they outsource to the Southern firms, the price of intermediate goods is low, whereas the cost of outsourcing is high. Using this model, this paper analyzes not only steady state but also transition path. This paper investigates that, as the economy develops, the wage inequality between the North and the South widens and that the outsourcing location for the Northern final good producers switches from the North to the South.

大企業と中小企業が両方存在している経済に焦点を当てて研究を行った。この研究において、大企業とは産業全体の価格をみて自分の価格を決める寡占企業とした。一方で、中小企業とは、産業全体の動向とは無関係に自身の費用と需要曲線のみを見て価格を決める独占的競争企業とした。このとき、貿易の自由化などで市場規模が拡大した場合、大企業と中小企業とではどちらが研究開発投資を積極的に行うのか、という問題に取り組んだ。そして、社会にとって最適な大企業と中小企業の生産量や研究開発投資量について分析を行った。その結果、以下の二つの成果を得ることができた。 一つ目は、市場規模の拡大は中小企業の行動には影響を与えないが、大企業の研究開発投資を増やすことがわかった。中小企業は自身の大きさが小さく、経済全体に与える影響は微少だと考えて行動しているので市場規模の拡大は中小企業の行動に影響を及ぼさない。一方で、大企業は市場規模の拡大により多数の中小企業が市場に参入してきて、自身の市場シェアが減少することを知っている。そこで大企業は研究開発投資を増加させて、自身の生産性を向上させて、生産量や利潤を増やそうとすることがわかった。二つ目は、市場経済での資源配分と大企業が存在する社会での最適な資源配分についての比較である。市場経済において、大企業は産業全体の価格をみて自身の価格を決定しているので、大企業の設定する価格は高く生産量は過少になっていることがわかる。そこで、政府はこの大企業の高価格を是正するために、中小企業よりも多くの補助金を大企業に与える必要がある。研究開発投資に関しても同様に、大企業は過少投資になっているので、中小企業よりも多くの補助金を受ける必要があることを示すことができた。

This projects has studied the interrelationship between the innovation activities and workers' cultural diversity, by both theoretically and empirically. We constructed spatial economic models which have shed lights on the sources of stagnation in Japanese innovation activities. Our models enables us to recognize that the important sources of innovation stagnation are lack of workers' diversity and spatial and inter-organizational mobility of them in Japan, especially in local "peripheral" regions. Moreover, to attract workers who can lead innovation activities is necessary for intensive innovation activities in regions. However, when each local government starts policies for attracting workers, an attraction competition among local governments will start. We show that this attraction competition is harmful because under this competition, each local region fails to attract innovative workers, and the costs for attraction policy becomes wasteful.