Regional allocation of skills

This paper addresses three questions: (1) why does the share of skilled workers in regional population tend to be higher in wealthier regions? (2) what determines changes in this share over time? and (3) why is it that internal migration tends to raise average skill levels of the receiving regions relative to that of the sending regions? I construct a two--region dynamic model with agglomeration and congestion to answer these questions. It is shown that, under certain relationship between wages and demand for land, unskilled workers are discouraged more strongly from living in a wealthier region and are less mobile than skilled workers