Regional Wage Differentials and the Spatial Convergence of Worker Characteristic Prices

Stephen C Farber and Robert Newman ()

The Review of Economics and Statistics, 1989, vol. 71, issue 2, 224-31

Abstract: This paper provides a test for variation in wage structures across regions. The authors suggest that the appropriate test for structural variation incorporates a combination of two lines of research: structural variation and compensating variation. The model of earnings determination used implies that, while job characteristic prices may be subject to stochastic shocks or industry-specific factors and, hence, may differ between regions, the returns to human capital characteristics will be regionally invariant. The results suggest that the theoretical expectations of regional homogeneity is generally supported for the decade of the 1970s. Copyright 1989 by MIT Press.

Date: 1989
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