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Regional Efficiency Wages: Are They a Source of Real Earnings Differentials?

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  • J.K. Mullen
  • Martin Williams

Abstract

This paper investigates the role of spatial efficiency wage premiums as a partial explanation for both inter†industry and geographic wage differentials. The empirical approach is based on an analysis of panel data for six select manufacturing industries operating within specific (U.S.) states. Besides testing for the existence of a regional “wage curve,†this research adds to the evidence on traditional determinants of spatial wage differentials. An explicit treatment of regional cost†of†living conditions is unique to the analysis; also, industry wage structures are accounted for in explaining regional wage differences. The findings here contribute to an initial body of evidence on regional efficiency wages. The empirical evidence indicates that the relationship between regional wages (nominal or real) and the local unemployment rate is much more complex than implied by the wage curve.

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  • J.K. Mullen & Martin Williams, 2001. "Regional Efficiency Wages: Are They a Source of Real Earnings Differentials?," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 13(3), pages 244-260, November.
    • Handle: RePEc:bla:revurb:v:13:y:2001:i:3:p:244-260
    DOI: 10.1111/1467-940X.00043
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    Cited by:

    1. Hipolito Simon & Raul Ramos & Esteban Sanroma, 2006. "Collective bargaining and regional wage differences in Spain: an empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 38(15), pages 1749-1760.
    2. Hipolito Simon & Raul Ramos & Esteban Sanroma, 2006. "Collective bargaining and regional wage differences in Spain: an empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 38(15), pages 1749-1760.

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