Ricardian model theory under different transfer forms and input factors

Abstract Desmet and Ortín analysed regional development using a Ricardian model theory. This paper uses their framework. The authors analyse the influence of wage subsidization, unemployment benefit, public employment management, consideration of the demographic factor and asymmetric value of the input factor labor on the development of regional inequalities between regions. By reducing the labor in the Ricardian model framework, the input factor can be reduced. The lower input factor labor leads to a reduction in the world market supply and to lower production, which in turns to decline in prosperity. Practical relevance results from the effects of external shocks such as unemployment benefits or demographic aspects. Both aspects reduce the labor population (asymmetric distribution of the input factor labor). This damages the advanced region rather than the underdeveloped region