Spatial Heterogeneity and the Wage Curve Revisited

Simonetta Longhi, Peter Nijkamp and Jacques Poot

ERSA conference papers from European Regional Science Association

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. Key words: Unemployment, wage formation, spatial analysis, local monopsony, Germany JEL classification: J21, J30, R23

Date: 2004-08
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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Citations: View citations in EconPapers (15)

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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:wiw:wiwrsa:ersa04p115

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