Economic regions, such as urban agglomerations, face external demand and price shocks that produce income risk. Workers in large and diversified agglomerations may benefit from reduced wage volatility, while firms may outsource the production of intermediate goods and realize benefits from...

In a federation, workers are generally legally entitled to seek employment in any locality or region. On the other hand, not all factors of production are equally mobile and some workers or other factors may not be able to relocate in order to take advantage of higher returns in other...