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The Spatial Distribution of Wages: Estimating the Helpman-Hanson Model for Germany

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Author Info
Steven Brakman
Harry Garretsen
Marc Schramm
Abstract

Using German district data we estimate the structural parameters of a new economic geography model as developed by Helpman (1998) and Hanson (1998, 2001a). The advantage of the Helpman-Hanson model is that it incorporates the fact that agglomeration of economic activity increases the prices of local (nontradable) services, like housing. This model thereby provides an intuitively appealing spreading force that allows for less extreme agglomeration patterns than predicted by the bulk of new economic geography models. Generalizing the Helpman-Hanson model, we also analyze the implications for the spatial distribution of wages once the assumption of real wage equalization is dropped. If we no longer assume real wage equalization we find support for a spatial wage structure as well as for the relevance of the structural parameters of the theoretical model. Copyright Blackwell Publishers, 2004

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.0022-4146.2004.00344.x
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Article provided by Blackwell Publishing in its journal Journal of Regional Science.

Volume (Year): 44 (2004)
Issue (Month): 3 ()
Pages: 437-466
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Handle: RePEc:bla:jregsc:v:44:y:2004:i:3:p:437-466

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  1. Steven Brakman & Harry Garretsen & Marc Schramm, 2005. "Putting New Economic Geography to the Test: Free-ness of Trade and Agglomeration in the EU Regions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Ahlfeldt, Gabriel M. & Wendlan, Nicolai, 2008. "Spatial Determinants of CBD Emergence: A Micro-level Case Study on Berlin∗," MPRA Paper 11572, University Library of Munich, Germany. [Downloadable!]
  3. Farmanesh, Amir, 2009. "Regional dimensions of economic development in Iran: A new economic geography approach," MPRA Paper 13580, University Library of Munich, Germany, revised 20 Aug 2009. [Downloadable!]
  4. Maarten Bosker & Harry Garretsen, 2008. "Economic Geography and Economic Development in Sub-Saharan Africa," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Reinhold Kosfeld & Hans-Friedrich Eckey, 2008. "Market Access, Regional Price Level and Wage Disparities: The German Case," MAGKS Papers on Economics 200814, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  6. Armando Pires, 2006. "Estimating Krugman’s Economic Geography Model for the Spanish Regions," Spanish Economic Review, Springer, vol. 8(2), pages 83-112, June. [Downloadable!] (restricted)
  7. Peter Huber & Michael Paffermayr & Yvonne Wolfmayr, 2006. "Market Potential and Border Effects in Europe," ERSA conference papers ersa06p469, European Regional Science Association. [Downloadable!]
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  8. Jože P. Damijan & Crt Kostevc, 2008. "Trade liberalization and economic geography in transition countries: Can FDI explain the adjustment patterns of regional wages?," LICOS Discussion Papers 22208, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  9. Serafeim POLYZOS & Dionysios MINETOS, 2009. "Informal Housing In Greece: A Quantitative Spatial Analysis," Cercetari practice si teoretice in managementul urban/Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 4(2(11)), pages 7-33, May. [Downloadable!]
  10. Florian Ploeckl, 2008. "Borders, Market Size and Urban Growth, The Case of Saxon Towns and the Zollverein in the 19th Century," Working Papers 966, Economic Growth Center, Yale University. [Downloadable!]
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  11. Maarten Bosker & Harry Garretsen, 2007. "Trade Costs, Market Access and Economic Geography: Why the Empirical Specification of Trade Costs Matters," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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