IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp0614.html
   My bibliography  Save this paper

Relative Wage Variation and Industry Location

Author

Listed:
  • Andrew B. Bernard
  • Stephen Redding
  • Peter K. Schott
  • Helen Simpson

Abstract

Relative wages vary considerably across regions of the United Kingdom, with skill-abundantregions exhibiting lower skill premia than skill-scarce regions. This paper shows that thelocation of economic activity is correlated with the variation in relative wages. U.K. regionswith low skill premia produce different sets of manufacturing industries than regions withhigh skill premia. Relative wages are also linked to subsequent economic development: overtime, increases in the employment share of skill- intensive industries are greater in regionswith lower initial skill premia. Both results suggest firms adjust production across and withinregions in response to relative wage differences.

Suggested Citation

  • Andrew B. Bernard & Stephen Redding & Peter K. Schott & Helen Simpson, 2004. "Relative Wage Variation and Industry Location," CEP Discussion Papers dp0614, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0614
    as

    Download full text from publisher

    File URL: https://cep.lse.ac.uk/pubs/download/dp0614.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    3. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2001. "Factor Price Equality and the Economies of the United States," NBER Working Papers 8068, National Bureau of Economic Research, Inc.
    4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    5. Jackman, Richard & Savouri, Savvas, 1992. "Regional Migration in Britain: An Analysis of Gross Flows Using NHS Central Register Data," Economic Journal, Royal Economic Society, vol. 102(415), pages 1433-1450, November.
    6. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-999, October.
    7. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982–1997," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 219-256, May.
    8. Patricia Rice & Anthony Venables, 2003. "Equilibrium Regional Disparities: Theory and British Evidence," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 675-686.
    9. Rachel Griffith, 1999. "Using the ARD establishment level data to look at foreign ownership and productivity in the UK," IFS Working Papers W99/06, Institute for Fiscal Studies.
    10. Griffith, Rachel, 1999. "Using the ARD Establishment Level Data to Look at Foreign Ownership and Productivity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 109(456), pages 416-442, June.
    11. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anu Tokila & Hannu Tervo, 2011. "Regional differences in returns to education for entrepreneurs versus wage earners," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(3), pages 689-710, December.
    2. J. Peter Neary & Joe Tharakan, 2005. "Endogenous mode of competition in general equilibrium," Working Papers 200526, School of Economics, University College Dublin.
    3. Neary, J. Peter & Tharakan, Joe, 2012. "International trade with endogenous mode of competition in general equilibrium," Journal of International Economics, Elsevier, vol. 86(1), pages 118-132.
    4. repec:rdg:wpaper:em-dp2004-04 is not listed on IDEAS
    5. Noel Gaston & Douglas R. Nelson, 2013. "Bridging Trade Theory And Labour Econometrics: The Effects Of International Migration," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 98-139, February.
    6. Eiichi Tomiura, 2005. "Factor Price Equalization In Japanese Regions," The Japanese Economic Review, Japanese Economic Association, vol. 56(4), pages 441-456, December.
    7. Constantina Kottaridi & Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2013. "Regional Mix and the Roles of Foreign Subsidiaries: A New Conceptualization and Empirical Evidence on the UK Case," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 63(1-2), pages 47-74, June.
    8. Cortez, Willy Walter & Islas-Camargo, Alejandro, 2009. "How Correlated are Mexico’s Salaries and Us Output? an Inquiry on Some Us Border Cities," Panorama Económico, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(08), pages 35-62, primer se.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    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 J. Redding & Peter K. Schott & Helen Simpson, 2008. "Relative Wage Variation and Industry Location in the United Kingdom," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(4), pages 431-459, August.
    3. Peter K. Schott, 2001. "Do Rich and Poor Countries Specialize in a Different Mix of Goods? Evidence from Product-Level US Trade Data," NBER Working Papers 8492, National Bureau of Economic Research, Inc.
    4. Ethan Lewis, 2004. "How did the Miami labor market absorb the Mariel immigrants?," Working Papers 04-3, Federal Reserve Bank of Philadelphia.
    5. Lorenzo Rotunno & Adrian Wood, 2015. "Wages and endowments in a globalised world," Economics Papers 2015-W11, Economics Group, Nuffield College, University of Oxford.
    6. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2001. "Factor Price Equality and the Economies of the United States," NBER Working Papers 8068, National Bureau of Economic Research, Inc.
    7. Bournakis, Ioannis & Papanastassiou, Marina & Pitelis, Christos, 2015. "Regional Growth and Convergence in the UK: the Role of MNE Subsidiaries and Domestic Firms," MPRA Paper 68090, University Library of Munich, Germany.
    8. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2013. "Testing for Factor Price Equality with Unobserved Differences in Factor Quality or Productivity," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 135-163, May.
    9. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia.
    10. Leena Kerkelä & Aki Kangasharju & Sari Pekkala, 2003. "Factor Price Equalization in Finland," ERSA conference papers ersa03p394, European Regional Science Association.
    11. Patrick Artus, 2006. "Intégration commerciale avec des pays émergents ayant des ressources importantes en main-d'œuvre qualifiée. Quels effets pour les pays européens ?," Revue économique, Presses de Sciences-Po, vol. 57(4), pages 673-704.
    12. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    13. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins, 2009. "Using The P90/P10 Index To Measure U.S. Inequality Trends With Current Population Survey Data: A View From Inside The Census Bureau Vaults," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 166-185, March.
    14. Fatih Guvenen & Burhanettin Kuruscu, 2010. "A Quantitative Analysis of the Evolution of the US Wage Distribution, 1970–2000," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 227-276, National Bureau of Economic Research, Inc.
    15. Philipp Harms & Pierre-Guillaume Méon, 2013. "The Growth Effects of Greenfield Investment and Mergers and Acquisitions: Econometric Investigation and Implication for MENA Countries," Working Papers 794, Economic Research Forum, revised Nov 2013.
    16. Ronald Bachmann & Peggy Bechara & Sandra Schaffner, 2016. "Wage Inequality and Wage Mobility in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(1), pages 181-197, March.
    17. James Spletzer & Elizabeth Weber Handwerker, 2015. "The Role of Establishments and the Concentration of Occupations in Wage Inequality," Working Papers id:7427, eSocialSciences.
    18. Nigel Driffield & Sourafel Girma, 2003. "Regional Foreign Direct Investment and Wage Spillovers: Plant Level Evidence from the UK Electronics Industry," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 453-474, September.
    19. Bourguignon, Francois, 2005. "The Effect of Economic Growth on Social Structures," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 27, pages 1701-1747, Elsevier.
    20. Orley Ashenfelter & Stepan Jurajda, 2001. "Cross-Country Comparisons of Wage Rates: The Big Mac Index," Working Papers 2001-7, Princeton University. Economics Department..

    More about this item

    Keywords

    Deindustrialization; Relative Factor Prices; Diversification Cones;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0614. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://cep.lse.ac.uk/_new/publications/discussion-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.