Countries are not perfectly integrated market areas. Even if institutional differences are much smaller within than between countries, there are persistent local cultural differences. These differences act as barriers that reduce economic exchange: bilateral migration, trade, and knowledge...

The home market effect (HME) is a distinguishing feature of the newʺ theory of international trade, but it is uncertain whether this effect survives if one moves beyond the simplifying setup with only two countries. We present a three-country version of the seminal model by Krugman (1980) and...

Standard models of the new trade and location theories usually assume full employment and are thus ill-equipped to study spatial unemployment differences, which in reality are more pronounced that income disparities Regional labour market theories like the ´wage curve´-approach on the other...

In this paper I analyze the impact of human capital on local employment growth for the case of West Germany (1977-2002). I find robust evidence that skilled cities grow faster than unskilled ones, but this need not indicate localized human capital externalities are at work. A large initial share...