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Globalisation And Wage Differentials: A Spatial Analysis

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  • BERNARD FINGLETON
  • MICHELLE CATHERINE BADDELEY

Abstract

In this paper, we assess the Fujita, Krugman and Venables (FKV) nonlinear model of wage differentials. Using a spatial econometric model incorporating a spatial autoregressive error process, we estimate a quadratic form using cross-sectional data for 98 countries from 1970 to 2000. The evidence suggests no necessary tendency for all countries to converge towards the stable upper root. Polarization is possible. This polarization may be permanent - generating persistent international wage differentials. Our findings suggest that moderating the transmission of shocks across countries should be a key element of international macroeconomic policy co-ordination.
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Suggested Citation

  • Bernard Fingleton & Michelle Catherine Baddeley, 2011. "Globalisation And Wage Differentials: A Spatial Analysis," Manchester School, University of Manchester, vol. 79(5), pages 1018-1034, September.
    • Handle: RePEc:bla:manchs:v:79:y:2011:i:5:p:1018-1034
    DOI: j.1467-9957.2011.02217.x
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    1. Elliott, Robert J.R. & Zhou, Ying, 2015. "Co-location and Spatial Wage Spillovers in China: The Role of Foreign Ownership and Trade," World Development, Elsevier, vol. 66(C), pages 629-644.

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    More about this item

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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