Spatial Heterogeneity and the Wage Curve revisited

Simonetta Longhi, Peter Nijkamp and Jacques Poot

No 04-054/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Most ‘wage curve’ studies treat local labour markets as independent ‘islands’ in the national economy. However, when a local labour market is in close proximity of other labour markets, a local shock that increases unemployment may not lead to lower pay rates if employers fear outward migration of their workers. Hence, the unemployment elasticity of pay will be greater, the more isolated the local labour market is. Wages are also expected to be higher in regions that interact strongly with other regions. These hypotheses are confirmed by means of an estimation of wage curves with data for 327 regions of western Germany over the period 1990-97.

Keywords: Unemployment; wage formation; spatial analysis; local monopsony; Germany (search for similar items in EconPapers)
JEL-codes: J21 J30 R23 (search for similar items in EconPapers)
Date: 2004-05-12
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: SPATIAL HETEROGENEITY AND THE WAGE CURVE REVISITED* (2006)
Working Paper: Spatial Heterogeneity and the Wage Curve Revisited (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20040054

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