Social ties, knowledge spillovers and regional convergence

We take th e F u jita & Thisse (2003) grow th-cum -geography m odel to investigate th e effect of m igration and enduring social re lationships on regional p roduction and grow th. We assert th a t m igration is an im ­ p o rta n t fac to r to overcome th e d istance decay effect of cross-regional knowledge spillovers, while social ties determ ine th e ex ten t to which th is is th e case. O ur resu lts show th a t w hen m igration and social ties are im p o rtan t for generating knowledge spillovers, th e full agglom era­ tio n of high-skilled R&D workers is no t a t all certain . T he equilibrium w ith an equally d ispersed high-skilled lab o ur force is a stable m igra­ tio n equilibrium , while regions w ith a larger in itia l share of high-skilled workers will only a ttr a c t m ore workers w hen m ig ration ra tes are not too high.