Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128796
Authors: 
Pfaffermayr, Michael
Huber, Peter
Wolfmayr, Yvonne
Year of Publication: 
2004
Series/Report no.: 
WIFO Working Papers 235
Abstract: 
We estimate a linear approximation of the market potential function derived in geography and trade models. Using a spatial econometric estimation approach, border effects can be identified by a differential impact of neighboring regions' purchasing power, depending on whether two regions are located in (i) the same country (ii) within the EU15 or (iii) outside the EU15. Our results suggest that there are substantial market potential effects on nominal wage rates. We also find significant border effects between EU15 and non-EU15 countries. Our estimation results suggests that the enlargement of the EU on May 2004 may lead to pronounced wage effects in the new member states, but to relatively small ones for the existing members.
Subjects: 
Market Potential
Border Effects
Spatial Econometrics
JEL: 
F10
R12
F12
C21
Document Type: 
Working Paper

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