@article{7aee0d3064d04734aeb8d50fd0d2c201,
title = "Elastic labor supply, variable markups, and spatial inequalities",
abstract = "Assuming an inelastic labor supply, existing studies show that a larger country has a higher wage rate and a higher individual income. We reexamine these results using a model with an endogenous labor supply and variable markups. We find that these results can be reversed. Specifically, in the larger country, the wage rate is lower but the individual income is higher if the love for variety is strong and trade costs are high. In contrast, the wage rate is higher but the individual income may be lower if the love for variety is weak and trade costs are low.",
author = "Hajime Takatsuka and Zeng, {Dao Zhi}",
note = "Funding Information: We thank two anonymous referees and Editor Hartmut Egger for valuable comments and suggestions that have greatly improved the paper. We also thank Taiji Furusawa, Naoto Jinji, Tadashi Morita, Yasusada Murata, Takatoshi Tabuchi, Kazuhiro Yamamoto, and the participants at Asia Pacific Trade Seminars 2015, 5th Asian Seminar in Regional Science, 62nd North American Meetings of the Regional Science Association International, 29th Annual Meeting of Applied Regional Science Conference, Semiannual Meeting of Japanese Economic Association 2016, and seminars at Kobe, Kyoto, Sendai, Beijing, Tianjin, Wuhan for helpful suggestions. This research was partially funded by JSPS KAKENHI Grant Numbers 16K03629 and 17H02514 of Japan, and the National Natural Science Foundation of China under the grant 71733001. Funding Information: JSPS KAKENHI, Grant/Award Numbers: 16K03629 and 17H02514; National Natural Science Foundation of China, Grant/Award Number: 71733001 Publisher Copyright: {\textcopyright} 2018 John Wiley & Sons Ltd",
year = "2018",
month = nov,
doi = "10.1111/roie.12350",
language = "English",
volume = "26",
pages = "1084--1100",
journal = "Review of International Economics",
issn = "0965-7576",
publisher = "Wiley-Blackwell Publishing Ltd",
number = "5",
}