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economic geography models for the distribution of income and production across space. The discussion highlights connections …
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Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing...
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-subsidized region has to import more. Moreover, when the subsidy is financed by a uniform income tax, all economic agents bear the tax … residents in the non-subsidised region are not hurt by the income loss, but they still lose due to higher price index. The … residents of the subsidised region have to give up more of their income for financing the subsidy. Thus, in both cases the net …
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