By means of theoretical and empirical analysis agglomeration economies as localized returns to scale are established as the basic source of economic disparity. The central implication for the labor market is the resulting path dependency of the spatial employment pattern. As an empirical...

On the basis of a theoretical model, we argue that higher aggregate unemployment affects individual returns to education. We therefore include aggregate unemployment and an interaction term between unemployment and the individual education level in a standard Mincer equation. Our results show...