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Factor Price Equality and the Economies of the United States

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  • Andrew Bernard
  • Stephen Redding
  • Peter Schott

Abstract

We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labor markets in both 1972 and 1992 . These deviations vary systematically with labor markets’ industry structure both in cross section and over time.

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File URL: ftp://ftp2.census.gov/ces/wp/2005/CES-WP-05-21.pdf
File Function: First version, 2005
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 05-21.

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Length: 34 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:cen:wpaper:05-21

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Keywords: Factor Price Equality; Regional Wages; Neoclassical Trade Theory; Labor Market Areas;

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References

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  12. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
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  15. Leamer, E.E., 1995. "The Heckscher-Ohlin Model in Theory and Practice," Princeton Studies in International Economics, International Economics Section, Departement of Economics Princeton University, 77, International Economics Section, Departement of Economics Princeton University,.
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  22. Hanson, Gordon H. & Slaughter, Matthew J., 2002. "Labor-market adjustment in open economies: Evidence from US states," Journal of International Economics, Elsevier, Elsevier, vol. 57(1), pages 3-29, June.
  23. Topel, Robert H, 1994. "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 17-22, May.
  24. Repetto, A. & Ventura, J., 1997. "The Leontief-Trefler Hypothesis and Factor Price Insensitivity," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 97-13, Massachusetts Institute of Technology (MIT), Department of Economics.
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