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Regional wage convergence and divergence: adjusting wages for cost-of- living differences

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  • Randall W. Eberts
  • Mark E. Schweitzer

Abstract

An examination of the divergence of U.S. regional fortunes in the early 1980s, showing that once regional prices are factored in, relative wage rates continue to converge across regions. The trend in regional wage variation is also shown to be attributable to declining differences in labor market valuations of worker attributes, rather than to shifts in the regional composition of the workforce.

Suggested Citation

  • Randall W. Eberts & Mark E. Schweitzer, 1994. "Regional wage convergence and divergence: adjusting wages for cost-of- living differences," Economic Review, Federal Reserve Bank of Cleveland, vol. 30(Q II), pages 26-37.
    • Handle: RePEc:fip:fedcer:y:1994:i:qii:p:26-37:n:v.30no.2
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    Cited by:

    1. Wojan, Timothy R. & Maung, Adam C., 1998. "The Debate Over State-Level Inequality:Transparent Method, Rules of Evidence, and Empirical Power," The Review of Regional Studies, Southern Regional Science Association, vol. 28(1), pages 63-80, Summer.
    2. Michael Beenstock & Daniel Felsenstein, 2003. "Decomposing the Dynamics of Regional Earnings Disparities in Israel," ERSA conference papers ersa03p90, European Regional Science Association.
    3. George Hammond, 2004. "Metropolitan/non-metropolitan divergence: A spatial Markov chain approach," Economics of Governance, Springer, vol. 83(3), pages 543-563, July.
    4. Easton, Todd, 2001. "Immigration and Natives' Wages: Understanding Their Correlation in the 1980s," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 219-235, Winter.
    5. George Hammond & Eric Thompson, 2002. "Mobility and Modality Trends in US State Personal Income," Regional Studies, Taylor & Francis Journals, vol. 36(4), pages 375-387.
    6. Susan B. Hansen & Carolyn Ban & Leonard Huggins, 2003. "Explaining the “Brain Drain†from Older Industrial Cities: The Pittsburgh Region," Economic Development Quarterly, , vol. 17(2), pages 132-147, May.
    7. James A. Kurre, 2003. "Is The Cost Of Living Less In Rural Areas?," International Regional Science Review, , vol. 26(1), pages 86-116, January.
    8. Fousekis, Panos, 2007. "Convergence of Relative State-level Per Capita Incomes in the United States Revisited," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 37(2), pages 1-10.
    9. Michael Beenstock & Daniel Felsenstein, 2007. "Mobility and Mean Reversion in the Dynamics of Regional Inequality," International Regional Science Review, , vol. 30(4), pages 335-361, October.
    10. Carolyn Sherwood-Call, 1996. "The 1980s divergence in state per capital incomes: what does it tell us?," Economic Review, Federal Reserve Bank of San Francisco, pages 14-25.
    11. George W. Hammond & Eric Thompson, 2006. "Convergence and Mobility: Personal Income Trends in U.S. Metropolitan and Nonmetropolitan Regions," International Regional Science Review, , vol. 29(1), pages 35-63, January.
    12. Todd Easton & Mary King, 2000. "Differences in Wage Levels Among Metropolitan Areas: Less-educated Workers in the United States," Regional Studies, Taylor & Francis Journals, vol. 34(1), pages 21-27.

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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