Mobility and Income Distribution

This article presents a model for income distribution among factors of production in the context of a globalised economy. Previous models are most often static and do not take into account the geographical location of the factors of production nor the mobility costs that result. We have created a dynamic Nash bargaining model that integrates the geographical distance between companies and the mobility costs for each production factor. The main result of this model is that income distribution closely depends on mobility costs: production factors with low mobility costs are those whose incomes increase most rapidly.