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Kohei Nagamachi
''Comparative Advantage and Skill Premium of Regions''
( 2013, Vol. 33 No.3 )
This paper provides one explanation for why a positive correlation is observed between the skill premium and income of regions. In doing so, this paper provides a model of self-organized sorting and skill premium with a continuum of heterogeneous individuals as well as a continuum of industries or tasks within a production process. It is found that the positive correlation emerges through the interaction between the location-occupation choice by individuals and regional comparative advantage. Spatial equilibrium, sorting, and product differentiation play a key role in determining the way in which such an interaction works.
Keywords: comparative advantage, skill premium, sorting
Manuscript Received : Jan 09 2013 Manuscript Accepted : Jul 11 2013

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