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Regional wages and market potential in the enlarged EU: An empirical investigation

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Author Info
Thomas Y. Mathä ()
Allison Shwachman

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Abstract

This paper empirically analyses the link between market potential and regional wages in the enlarged EU. We extend previous studies of EU regions in several ways. 1) we analyze the link between market potential and wages for the EU27, 2) correct for spatial autocorrelation present in the data, showing that by neglecting spatial autocorrelation the strength of the relationship between market potential and wages may be underestimated, 3) decompose total market potential into several geographical components and analyze their respective contributions to explaining the geographical wage structure, and 4) explore which regions have gained the most from European integration by calculating counterfactual market potential if they could only trade with other regions within the same country.

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File URL: http://www.bcl.lu/fr/publications/cahiers_etudes/37/index.html
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Publisher Info
Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 37.

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Length: 48 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:bcl:bclwop:cahier_etudes_37

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Web page: http://www.bcl.lu/

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Related research
Keywords: Market potential; market access; regional wages; distance; European Union;

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F15 - International Economics - - Trade - - - Economic Integration
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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This page was last updated on 2009-12-21.

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