Market Access, Regional Price Level and Wage Disparities: The German Case
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, standar...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 14-2008) |
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| Main Authors: | , |
| Format: | Work |
| Language: | English |
| Published: |
2008
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | 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. |
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| Physical Description: | 29 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2023.0201 |