The skilled U-shaped Europe: is it really and on which side does it stand?

Helena Marques

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: This paper derives from a New Economic Geography model, and estimates, a quadratic sectoral real wage equation for the member countries of the enlarged EU. When significant, the real wages U-shaped curve is increasing and concave with respect to market access, but decreasing and convex with respect to access to skilled labour. Real wages in Chemicals, Wood Products, Leather Products and Textiles do not react to market access, and only those sectors with low degree of scale economies and low-skill intensity are U-shaped with respect to access to skilled labour. At the present GDP levels, EU geography is still in the divergence-inducing side of the U-curve. In addition, EU real wages are significantly determined by country-specific characteristics other than geography that push Northern real wages upward and pull Eastern real wages downward.

Keywords: wage equation; labour demand; human capital; EU enlargement; market potential (search for similar items in EconPapers)
JEL-codes: F15 F22 J31 L6 (search for similar items in EconPapers)
Date: 2004-03, Revised 2004-03
New Economics Papers: this item is included in nep-cwa, nep-fmk, nep-ifn and nep-int
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