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L1= F [w1− w2+ A1− A2−(r1− r2)], where L1= P (ξi< v1− v2) is the measure of workers in community 1. Firms have Cobb-Douglas production functions of the form Yj= Bj LjαKj1− α where Bj represents local productivity levels, Lj the measure of workers in each community, and Kj the stock of capital in location j. We assume that firms make zero profits, that output is sold on an international market at fixed price one, and that capital is supplied to each area at constant marginal cost cj. Factor demands are chosen to equate marginal products to input prices. With some algebra, one arrives at the following local wage function: ln wj= 1 __ α ln Bj− Q 1− α