Why Are Some Places So Much More Unequal Than Others?

Jaison Abel and Richard Deitz

Economic Policy Review, 2019, vol. 25, issue Dec

Abstract: This study examines the magnitude and sources of regional wage inequality in the United States. The authors find that, as in the nation as a whole, wage inequality has increased in nearly every metropolitan area since the early 1980s, though there is significant variation among places in both the degree of wage inequality and the pace at which it has risen. The most unequal places tend to be large urban areas that have benefited from strong demand for skill and agglomeration economies, with these factors leading to particularly rapid wage growth for high-skilled workers. The least unequal places tend to have seen weak demand for labor, largely as a consequence of technological change and globalization, and this weakness has led to lackluster wage growth across the entire wage distribution— particularly for middle- and lower-skilled workers. These findings suggest that a relatively low level of regional wage inequality is often the result of a weakening local economy, while relatively high regional wage inequality is often a consequence of strong but uneven economic growth.

Keywords: Skills; Wages; Spatial Changes; Inequality; Local Labor Markets (search for similar items in EconPapers)
JEL-codes: J22 J23 J31 R11 R12 R23 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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