Abstract
This paper introduces multinational firms in a new economic geography model. There, unskilled labor mobility leads to less concentration of production than skilled labor mobility does. This is in line with empirical evidence that agglomeration of production in Europe is less pronounced than in the United States. The different patterns in (skilled versus unskilled) labor mobility together with the presence of multinational firms form one explanation of the actual differences in the spreading of industries in Europe as compared to the US
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