Factor Price Equality and the Economies of the United States

Andrew Bernard, J. Jensen () and Peter Schott

No 8068, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Do New York and Nashville face the same pressures from increased trade? This paper considers the role of international trade in shaping the product mix and relative wages for regions within the US. Using the predictions from a Heckscher-Ohlin trade model, we ask whether all the regions in the US face the same relative factor prices. Using the production side of the HO model, we derive a general test of relative factor price equality that is robust to unobserved regional productivity differences, unobserved regional factor quality differences, and variations in production technology across industries. Using data from 1972-1992, we reject the the hypothesis that all regions face the same relative factor prices in favor of an alternative with at least three distinct factor price cones. Sort regions into cones with similar relative factor prices, we find that industry mix varies systematically across the groups. Regions that switch cones over time have more churning of industries.

JEL-codes: F11 (search for similar items in EconPapers)
Date: 2001-01
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Factor Price Equality and the Economies of the United States (2005)
Working Paper: Factor Price Equality and the Economies of the United States (2005)
Working Paper: Factor Price Equality and the Economies of the United States (2005)
Working Paper: Factor price equality and the economies of the United States (2005)
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