【文章內(nèi)容簡介】
do with the mobility of factors of production. At the country level, there may be barriers to mobility of both capital and labour. Capital in today’s world has bee much more mobile than was the case, say, 50 years ago or even twenty years ago. But there are still restrictions in many countries on the flow of financial capital in and out of a country. But more significantly, there are major restrictions on the mobility of labour between countries. Most countries have strict immigration laws that control the movement of workers across borders. What is different in the regional case, is that because we are dealing with regions inside a country, labour and capital are free to move anywhere in the country at the discretion of the individual worker or owner of capital. Which brings us back to the issue of how markets adjust and what government involvement in regional development should enpass. Suppose we have two regions, A and B. Assume A is a highwage, highine region and B is a lowwage, lowine region. If labour is free to move from B to A, then the relatively higher wage in A will cause workers to move to A and leave B. When this happens, the supply of workers in A will rise and the supply of workers in B will fall. When the supply of workers goes up, all other things equal, the wage rate paid to workers will fall. And when the supply goes down, the wage rate will rise. So when workers move from B to A, all other things equal, the wage rate in A should go down and the wage rate in B should go