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A Lucas island model to analyse labour movement choice between cities based on personal characteristics

Year: 2024

Type: article

Abstract: This paper describes and derives a Lucas-Prescott style island model, to model the location choices of the heterogeneous agents by utilising endogenous technology growth, which in turn influences personal human capital growth. It leads to the U-shape curve of the inequality of wage income with the technology of these islands but not in terms of total income. In the extended two-goods model, the magnitude of the implications is lessened by the impact the price of non-tradable goods has as an automatic stabiliser. We found that skilled labours with less endowed wealth tend to live in large cities for its high salary. On the other hand, those less-skilled labours but with more endowed wealth tend to live in cities with better environment, which drives up the price level of non-tradable goods in these cities. This explains the population concentration in the super cities and the high housing price-wage ratio in some beautiful cities.

Source: Humanities and Social Sciences Communications

DOI: 10.1057/s41599-024-03627-9

Authors: Tiange Qi, Yuning Gao, Yongjian Huang

Institutions: University of Cambridge, Tsinghua University, Central University of Finance and Economics

Language: English

Topic: Regional Economics and Spatial Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Reduced inequalities, Sustainable cities and communities

Open Access status: gold

Estimated APC paid: $1,690