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Regional Heterogeneity In Wage Distributions: Evidence From Spain

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  • Elisabet Motellón
  • Enrique López‐Bazo
  • Mayssun El‐Attar

Abstract

Regional differences in real wages have been shown to be both large and persistent in the U.S. and the U.K., as well as in the economies of other countries. Empirical evidence suggests that wage differentials adjusted for the cost of living cannot only be explained by the unequal spatial distribution of characteristics determining earnings. Rather, average wage gap decomposition reveals the important contribution made by regional heterogeneity in the price assigned to these characteristics. This paper proposes a method for assessing regional disparities in the entire wage distribution and for decomposing the effect of differences across regions in the endowments and prices of the characteristics. The hypothesis forwarded is that the results from previous studies obtained by comparing average regional wages may be partial and non-robust. Empirical evidence from a matched employer-employee dataset for Spain confirms marked differences in wage distributions between regions, which do not result from worker and firm characteristics but from the increasing role of regional differences in the return to human capital.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 51 (2011)
Issue (Month): 3 (08)
Pages: 558-584

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Handle: RePEc:bla:jregsc:v:51:y:2011:i:3:p:558-584

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146

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Cited by:
  1. Hernández, Laura & Serrano, Lorenzo, 2012. "Overeducation and its effects on wages: a closer look at the Spanish regions," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 24, pages 59-90.
  2. Aurora Galego & João Pereira, 2013. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: the Importance of Covariates," CEFAGE-UE Working Papers 2013_16, University of Evora, CEFAGE-UE (Portugal).

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