Externalities is the amount of skill acquired by an individual in a learning context, formal or informal, depends on the amount of skill possessed by the people with whom he or she is interacting. The quality and qualifications of teachers likewise affect how much students learn in school and college, and in specific vocational training. The degree of skill acquired by on-the-job training depends on the skills of colleagues and superiors, and of customers and other contacts outside the workplace. By no means all skill acquisition involves direct contact with other people; books and materials are also vital. Nor, with phones and faxes, need personal contacts always be face to face. But these sorts of externalities, in conjunction with limited mobility, contribute powerfully to the persistence of North-South skill differences (Chatterji, Monojit, and Roger Sparks. 1991).
Better infrastructure is probably only part of the reason why skilled workers earn absolutely more in the North, despite their greater relative abundance. The main reason seems to be that skilled workers are more productive when they are clustered together, in countries where they are relatively numerous, and in skill-intensive activities. The causes of this phenomenon are closely related to some of the things mentioned in the preceding subsection, particularly externalities. The discussion in that subsection was about the acquisition rather than the use of skills, but for many skilled workers the two activities are inextricably entwined.
International migration, though its relative scale is not great enough to warrant relaxation of the immobility assumption, does involve absolutely large numbers of people. In the North-South trade in manufactures, where neither capital nor raw materials plays a fundamental role, the consequences of international labor mobility are simpler than in other models. But trade and mobility have equivalent effects on factor prices have to be modified (Devine......
