In this paper, we propose a new perspective to analyze the impact of institutions, environmental standards, and globalization on relocations of polluting rms in countries with lax environmental regulation (called pollution havens). Via a simple theoretical extension from the Economic Geography literature, we characterize the main features of pollution havens: a good market access to high-income countries and corruption opportunities. Using structural and reduced-form estimations, we analyse these determinants by exploiting a unique database on the number of European aliates located abroad. A 1% increase in access to the European market from a pollution haven fosters relocation there by 0.1%. We also nd that corruption in these countries lowers environmental standards, which strongly attract polluting rms: a 1% increase in this indirect eect of corruption fuels relocation by 0.28%. We test the economic signicance of these empirical ndings via simulations. The protection of the European market (e.g., a carbon tax on imports) to stop relocations to pollution havens must be high (a decrease of the European market for Morocco and Tunisia equivalent to 13%) not to say prohibitive (31% for China).Keywords: Multinational rms; Environmental Regulation; Europe; Corruption; Market Access, Trade.JEL: F12;Q5;Q53 * Corresponding author: fabien.candau@univ-pau.fr † We thank Simone Bertoli, Antoine Bouët, Pierre-Philippe Combes, Matthieu Crozet, José de Sousa, CarlGaigné, Michaël Goujon, Jacques Le Cacheux, Serge Rey, Frédéric Robert-Nicoud, François-Charles Wol for their attentive reading and comments. We also thank seminar and conference participants at CERDI, ETSG, U. Geneva, U. Toulon.

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This study is a theoretical and empirical analysis of the effects of regional trade integration on the spatial distribution of skills. We first develop a theoretical model in the economic geography field to integrate heterogeneous workers, housing, local entrepreneurs and skill upgrading by unskilled workers. We then analyse how the domestic integration of each state in the U.S., approximated by truck registrations, influenced the location choice of skilled and unskilled workers in 1940-1960. By using inter-and intrastate trade flow from the U.S. Commodity Flow Survey, we also analyse the impact of regional trade costs for the contemporary period (1997, 2002, 2007). The theoretical model shows that the bell-shaped curve of spatial development displays a sorting of individuals and firms. Only high-skilled workers increasingly choose the core region during the process of regional integration while intermediate-skilled workers move to the periphery due to the increase in the price of housing. By impacting differently on the opportunity cost to invest in skill acquisition in the core and the periphery, this sorting influences the regional creation of human capital. First a regional divergence in education investment occurs, and then a convergence, but only for high level regional integration. The empirical analysis confirms that regional trade integration has been a determinant of the spatial distribution of skills in the United States.

We document the emergence of spatial polarization in the U.S. during the 1980-2008 period. This phenomenon is characterised by stronger employment polarization in larger cities, both at the occupational and the worker level. We quantitatively evaluate the role of technology in generating these patterns by constructing and calibrating a spatial equilibrium model. We find that faster skill-biased technological change in larger cities can account for a substantial fraction of spatial polarization in the U.S. Counterfactual exercises suggest that the differential increase in the share of low-skilled workers across city size is due mainly to the large demand by high-skilled workers for low-skilled services and to a smaller extent to the higher complementarity between low- and high-skilled workers in production relative to middle-skilled workers.