Globalisation and Wage Differentials: A Spatial Analysis

Michelle Baddeley and Bernard Fingleton ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: In this paper, we assess the Fujita, Krugman and Venables (FKV) nonlinear model of wage differentials. Using a spatial econometric model incorporating a spatial autoregressive error process, we estimate a quadratic form using cross-sectional data for 98 countries from 1970 to 2000. The evidence suggests no necessary tendency for all countries to converge towards the stable upper root. Polarization is possible. This polarization may be permanent - generating persistent international wage differentials. Our findings suggest that moderating the transmission of shocks across countries should be a key element of international macroeconomic policy co-ordination.

Keywords: Globalisation; convergence; wage differentials; spatial error models (search for similar items in EconPapers)
JEL-codes: R12 R15 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-cba, nep-geo, nep-lab and nep-ure
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https://files.econ.cam.ac.uk/repec/cam/pdf/cwpe0845.pdf Working Paper Version (application/pdf)

Related works:
Journal Article: GLOBALISATION AND WAGE DIFFERENTIALS: A SPATIAL ANALYSIS (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0845

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