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Factor Price Equalization In Japanese Regions

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  • EIICHI TOMIURA

Abstract

This paper tests factor price equalization (FPE) in Japanese regions. I found that FPE is strongly rejected, even when unobserved cross‐regional differences in factor quality and productivity are considered. The wage tends to be low in labour‐abundant regions specializing in labour‐intensive industries. The cross‐regional gap in absolute wage levels remains large, while convergence is observed during the 1990s, a period of wage declines that appeared to be related to deep import penetration. This finding of FPE violation is to be expected, given the restricted interregional labour mobility and distinctive difference in specialization patterns across regions in Japan.

Suggested Citation

  • Eiichi Tomiura, 2005. "Factor Price Equalization In Japanese Regions," The Japanese Economic Review, Japanese Economic Association, vol. 56(4), pages 441-456, December.
    • Handle: RePEc:bla:jecrev:v:56:y:2005:i:4:p:441-456
    DOI: 10.1111/j.1468-5876.2005.00339.x
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    References listed on IDEAS

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    1. Bernard, Andrew & Redding, Stephen & Simpson, Helen & Schott, Peter, 2002. "Factor Price Equalization in the UK?," CEPR Discussion Papers 3523, C.E.P.R. Discussion Papers.
    2. Andrew B. Bernard & Stephen Redding & Peter K. Schott & Helen Simpson, 2003. "Relative Wage Variation and Industry Location," NBER Working Papers 9998, National Bureau of Economic Research, Inc.
    3. Holger C. Wolf, 1997. "Patterns of Intra- and Inter-State Trade," NBER Working Papers 5939, National Bureau of Economic Research, Inc.
    4. Gordon H. Hanson, 2003. "What Has Happened to Wages in Mexico since NAFTA?," NBER Working Papers 9563, National Bureau of Economic Research, Inc.
    5. Russell Hillberry & David Hummels, 2002. "Explaining Home Bias in Consumption: The Role of Intermediate Input Trade," NBER Working Papers 9020, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Kiyota, Kozo, 2012. "A many-cone world?," Journal of International Economics, Elsevier, vol. 86(2), pages 345-354.
    2. KIYOTA Kozo & KUROKAWA Yoshinori, 2017. "Factor Intensity Reversals Redux," Discussion papers 17021, Research Institute of Economy, Trade and Industry (RIETI).
    3. repec:lje:journl:v:20:y:2015:i:1:p:105-133 is not listed on IDEAS
    4. Rotunno, Lorenzo & Wood, Adrian, 2020. "Wage inequality and skill supplies in a globalised world," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 529-547.
    5. Resham Naveed, 2015. "Relative Factor Abundance and Relative Factor Price Equality in Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(1), pages 105-133, Jan-June.
    6. Lorenzo Rotunno & Adrian Wood, 2015. "Wages and endowments in a globalised world," Economics Papers 2015-W11, Economics Group, Nuffield College, University of Oxford.

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