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Title:Market access, regional price level and wage disparities: the German case PDF Logo
Authors:Kosfeld, Reinhold
Eckey, Hans-Friedrich
Issue Date:2008
Series/Report no.:Joint discussion paper series in economics 2008,14
Abstract:In this paper we use the NEG framework of the Helpman model to investigate the spatial distribution of wages across German labour market regions under different assumptions. As the assumptions of equal regional price level and equal real wages are strongly rejected for the German economy, standard approaches may fail to reveal the role of market access in explaining regional wage disparities. In part substantial changes occur when market potential is measured with the aid of regional price levels. With the so-called price index approach, the importance of market access in explaining regional wage differentials is clearly revealed. When controlling for heterogeneity of labour force and spatial dependence, the relationship still remains highly significant. From the price index approach, limited demand linkages of reasonable reach are inferred.
Subjects:New Economic Geography
market access
wage disparities
regional price levels
JEL:R11
R12
R15
Document Type:Working Paper
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

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