Scholarlink

<p>This paper develops a spatial general equilibrium model with heterogeneous human capital and endogenous location choice to analyze the consequences of inter-city market segmentation. We model segmentation as a mobility friction that impedes workers from costlessly moving to cities offering the highest utility. We show that segmentation generates spatial human capital misallocation relative to the efficient sorting benchmark. Crucially, by reducing the elasticity of local labor supply faced by profit-maximizing entrepreneurs, segmentation grants them wage-setting power. This leads to equilibrium wages below workers’ marginal product, constituting entrepreneurial exploitation rent. While segmentation unambiguously reduces aggregate worker welfare due to mismatch and exploitation, its effect on aggregate output is theoretically ambiguous, depending on the interplay between mismatch costs and potential benefits from factor concentration. This ambiguity creates a potential trade-off for governments: prioritizing aggregate output might lead to tolerating or even fostering segmentation, despite adverse welfare implications. Numerical simulations quantify these effects and explore sensitivity to key parameters.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Market Segmentation, Human Capital Misallocation, and Entrepreneurial Exploitation in a Spatial Economy

  • 期刊论文

  • 发表日期：

    2025年9月24日

查看全文
  • Zhuo Feng

摘要

This paper develops a spatial general equilibrium model with heterogeneous human capital and endogenous location choice to analyze the consequences of inter-city market segmentation. We model segmentation as a mobility friction that impedes workers from costlessly moving to cities offering the highest utility. We show that segmentation generates spatial human capital misallocation relative to the efficient sorting benchmark. Crucially, by reducing the elasticity of local labor supply faced by profit-maximizing entrepreneurs, segmentation grants them wage-setting power. This leads to equilibrium wages below workers’ marginal product, constituting entrepreneurial exploitation rent. While segmentation unambiguously reduces aggregate worker welfare due to mismatch and exploitation, its effect on aggregate output is theoretically ambiguous, depending on the interplay between mismatch costs and potential benefits from factor concentration. This ambiguity creates a potential trade-off for governments: prioritizing aggregate output might lead to tolerating or even fostering segmentation, despite adverse welfare implications. Numerical simulations quantify these effects and explore sensitivity to key parameters.