ISBN : 2738471668
LABOUR MIGRATION AND INTRA-REGIONAL TRANSFER POLICIES
Abstract - We consider a two-region, two-sector model "à la Krugman", where a tendency to geographic concentration of activities does exist. We show that decentralized governments are able, by means of "competitive transfers" within each region, to counteract that tendency. That leads in many cases to worse equilibria. The result is that social optimum can only be restored by a federal government....