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Relative Wage Variation and Industry Location

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Author Info
Andrew B. Bernard
Stephen Redding
Peter K. Schott
Helen Simpson

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Abstract

Relative wages vary considerably across regions of the United Kingdom, with skill-abundantregions exhibiting lower skill premia than skill-scarce regions. This paper shows that thelocation of economic activity is correlated with the variation in relative wages. U.K. regionswith low skill premia produce different sets of manufacturing industries than regions withhigh skill premia. Relative wages are also linked to subsequent economic development: overtime, increases in the employment share of skill- intensive industries are greater in regionswith lower initial skill premia. Both results suggest firms adjust production across and withinregions in response to relative wage differences.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0614.

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Date of creation: Feb 2004
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Handle: RePEc:cep:cepdps:dp0614

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Related research
Keywords: Deindustrialization; Relative Factor Prices; Diversification Cones;

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-87, December. [Downloadable!] (restricted)
  2. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-99, October. [Downloadable!] (restricted)
  3. Griffith, Rachel, 1999. "Using the ARD Establishment Level Data to Look at Foreign Ownership and Productivity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 109(456), pages F416-42, June. [Downloadable!] (restricted)
  4. Bernard, Andrew B & Stephen Redding & Peter K. Schott, 2003. "Factor Price Equalization in the UK?," Royal Economic Society Annual Conference 2003 21, Royal Economic Society. [Downloadable!]
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  5. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier. [Downloadable!] (restricted)
  6. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2005. "Factor Price Equality and the Economies of the United States," CEP Discussion Papers dp0696, Centre for Economic Performance, LSE. [Downloadable!]
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  7. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997," Journal of Regional Science, Blackwell Publishing, vol. 42(2), pages 219-256. [Downloadable!] (restricted)
  8. Jackman, Richard & Savouri, Savvas, 1992. "Regional Migration in Britain: An Analysis of Gross Flows Using NHS Central Register Data," Economic Journal, Royal Economic Society, vol. 102(415), pages 1433-50, November. [Downloadable!] (restricted)
  9. Patricia Rice & Anthony Venables, 2003. "Equilibrium Regional Disparities: Theory and British Evidence," Regional Studies, Taylor and Francis Journals, vol. 37(6-7), pages 675-686, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Neary, J Peter & Tharakan, Joe, 2006. "Endogenous Mode of Competition in General Equilibrium," CEPR Discussion Papers 5943, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Constantina Kottaridi & Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2004. "Choice of Location and the Roles of Foreign Subsidiaries: Evidence from UK Regions," Economics & Management Discussion Papers em-dp2004-04, Henley Business School, Reading University. [Downloadable!]
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