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Do Local Relative Factor Supplies Affect Local Relative Factor Prices?

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Author Info
Joelle Saad-Lessler (Long Island University)
Abstract

This paper examines whether local relative factor supplies affect local relative factor prices across US states. Using data on relative wages and relative labor supplies across the US, I find that state specific relative labor supplies significantly impact state specific relative wages across the US. Moreover, in an effort to reconcile my finding with that of Hanson and Slaughter (2000), I rerun their model and I prove that their interpretation is incorrect, and that in fact, differences in relative labor supplies across states determine relative wages and industry production techniques. These findings suggest that relative FPE does not hold across US states. In addition, the findings imply that immigration shocks to US states have a significant effect on relative wages, holding all else equal, as long as the immigrant inflows significantly impact states' relative labor supplies.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Topics in Economic Analysis & Policy.

Volume (Year): 5 (2005)
Issue (Month): 1 ()
Pages: 1222-1222
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Handle: RePEc:bep:eaptop:v:5:y:2005:i:1:p:1222-1222

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Related research
Keywords: Immigration Relative Factor Price Equalization

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-87, December. [Downloadable!] (restricted)
  2. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
    Other versions:
  3. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1996. "Searching for the Effect of Immigration on the Labor Market," NBER Working Papers 5454, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Topel, Robert H, 1994. "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, American Economic Association, vol. 84(2), pages 17-22, May. [Downloadable!] (restricted)
  5. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  6. George J. Borjas, 1987. "Immigrants, minorities, and labor market competition," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 40(3), pages 382-392, April.
  7. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November. [Downloadable!] (restricted)
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  8. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," Harvard Institute of Economic Research Working Papers 1849, Harvard - Institute of Economic Research.
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  10. 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. [Downloadable!] (restricted)
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  11. Davis, Donald R. & David E. Weinstein & Scott C. Bradford & Kazushige Shimpo, 1997. "Using International and Japanese Regional Data to Determine When the Factor Abundance Theory of Trade Works," American Economic Review, American Economic Association, vol. 87(3), pages 421-46, June. [Downloadable!] (restricted)
  12. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
  13. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-91, October. [Downloadable!] (restricted)
  14. George J. Borjas, 1987. "Immigrants, Minorities, and Labor Market Competition," NBER Working Papers 2028, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June. [Downloadable!] (restricted)
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