Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks

Filipe Lage de Sousa

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: Firms generally choose to locate their production where profits are maximized. As costs affect profits, trade-offs between two marginal costs - employees' wages and transport costs - may be important for decisions regarding location. Wages tend to be greater in industrial centres and decrease as transport costs increase. Trade shocks might impact regional wage disparities by making foreign markets, for example, relatively more attractive for firms than domestic markets. This paper tests these two hypotheses by using regional Brazilian data. Results corroborate that regions with higher transport costs present lower wages, and that trade shocks affect these regional wage disparities.

Keywords: Economic geography; trade shocks; manufacturing wages (search for similar items in EconPapers)
JEL-codes: F12 F14 R12 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cep:sercdp:0046

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