Regional Wage and Employment Responses to Market Potential in the EU

Keith Head and Thierry Mayer

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: In new economic geography models, the spatial distribution of demand is a key determinant of economic outcomes. In one strand, it is argued that higher demand gives rise to a more than proportionate increase in production, a result known as the home market effect. Another strand emphasizes the effects of market sizes on factor prices. We highlight the theoretical connection between these two strands. Using data on 57 European regions, we show how wages and employment respond to differentials in what we call real market potential, a discounted sum of demands derived from the theory.

Keywords: Home market effects; Wage equation; Gravity equation; New economic geography (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (192)

Published in Regional Science and Urban Economics, 2006, 36 (5), pp.573-594. ⟨10.1016/j.regsciurbeco.2006.06.002⟩

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Related works:
Journal Article: Regional wage and employment responses to market potential in the EU (2006)
Working Paper: Regional Wage and Employment Responses to Market Potential in the EU (2006)
Working Paper: Regional Wage and Employment Responses to Market Potential in the EU (2006)
Working Paper: Regional wage and employment responses to market potential in the EU (2006)
Working Paper: Regional Wage and Employment Responses to Market Potential in the EU (2006)
Working Paper: Regional Wage and Employment Responses to Market Potential in the EU (2005)
Working Paper: Regional Wage and Employment Responses to Market Potential in the EU (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-00267437

DOI: 10.1016/j.regsciurbeco.2006.06.002

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