Abstract
We take the Fujita & Thisse (2003) growth-cum-geography model to
investigate the implications of seeing social ties as an important reason
for the generation of knowledge. Moreover, we model migration as an
important channel through which the distance decay e§ect of crossregional
knowledge spillovers materialize. Our results show that in
such a setting the full agglomeration of high-skilled workers that are
engaged in R&D activities is not a straightforward outcome. The
equilibrium with an equally dispersed high-skilled labour force is a
stable migration equilibrium, while regions with a larger initial share
of high-skilled workers will only attract more workers when migration
rates are not too high. When social ties are important in generating
knowledge and knowledge spillovers, the full agglomeration of highskilled
workers in one region is not at all certain. In such a case, growth
is however not optimal. As such, the trade-o§ between reaching
optimal growth and equal distribution of economic activity remains.
