INTERREGIONAL EQUILIBRIUM WITH HETEROGENEOUS LABOR

The impact of labor migration on interregional equilibrium is studied when workers are heterogeneous in productivity and regional mobility, The skilled respond to market disequilibrium by moving into the most a ttractive region. The unskilled are immobile in the short-run and move with the skilled in the long-run, Both regions have a neoclassical pr oduction function affected by an externality depending on the number o f skilled, Workers move according to the utility differential when reg ional amenities vary with population or according to the wage differen tial, The equilibrium pattern depends on the unskilled's mobility and on migration incentives, Typically, regional imbalance characterizes t he equilibrium which is often suboptimal.