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1、JournalofPublicEconomics46(1991)l-27.North-HollandRegionalheterogeneity,migration,andshadowpricesCliveBell*VanderbiltUniuersity,Nashville,TN37235,USAReceivedMarch1989,revisedversionreceivedJanuary1991Thispaperdealswithsomespatialinfluencesonsocialscarcities:first,theexistenceofregionalgoods,w
2、hichusuallyimpliesdifferencesinconsumerprices;second,differencesinpreferencesacrosslocations;andthird,arigidwageinoneretion,whichmayresultinexpostinequalitiesamongmigrantswhowereidenticalexante.Itisshownthat,ingeneral,theshadowwagedependsonregionaldifferencesinthecostoflivingandpreferences,an
3、dthattheeffectofashiftfromexantetoexpostsocialwelfareontheshadowwageisunclear.Inthisconnection,theassumptionthatthemarginalproductoflaboris(locally)constantprovestobemuchstrongerthaniscommonlyrecognized.1.IntroductionInaregionallyheterogeneouseconomy,thereareanumberofpotentiallyimportantspati
4、alinfluencesonthesocialscarcitiesofgoodsandfactors.First,amonggoodsthatarenotinternationallytradeable,adistinctionmustbedrawnbetweennationalgoods,whicharereadilytradeablebetweenregions,andregionalgoods,whicharenot.Secondly,ifallfactorsarenotperfectlymobile,thereusuallywillbedifferencesinincom
5、esacrossregionsand,inthepresenceofregionalgoods,differencesalsoinregionalcost-of-livingindices.Thirdly,ifthewagerateinaregionissetaboveitsmarket-clearinglevel,thenmigrationtothatregionmayresultininequalityexpostamongindividualswhowereidenticalexante.Theobjectofthispaperistoanalyzetheseconside
6、rationsinaunifiedway.Thereis,ofcourse,anextensiveliteratureontheshadowwagerateandlabormigration[see,forexample,Harberger(1971),Mazumdar(1976),Heady(1981,1988),SahandStiglitz(1985),andGupta(1988)JWiththeexceptionofHeady(1988),however,ithaslargelyignoredthefirstoftheaboveconsiderations.Asaresul
7、t,regionaldifferencesinthecostofliving*IamindebtedtoEdwardBuNieandtheparticipantsinaseminarattheUniversityofRegensburg,especiallyWolfgangWiegard,forvaluablecommentsonanearlydraftofthispaper.Iamalsogratefultotwoanonymousreferees,whosecommentsa
