Agglomeration of Low-productive Entrepreneurs to Large Regions: A Simple Model

Author Name Rikard FORSLID (Stockholm University) / OKUBO Toshihiro (Keio University)
Creation Date/NO. December 2019 19-E-102
Research Project Analyses of Offshoring
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This paper develops a simple model of spatial sorting where the least productive entrepreneurs are drawn to the large core region. This is an unusual feature. The literature on spatial sorting typically shows how the most productive individuals and firms agglomerate to the core. However, our model is consistent with data that reveals that large agglomerations also attract unproductive entrepreneurs.