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Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks

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  • Filipe Lage de Sousa
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    Abstract

    Firms generally choose to locate their production where profits are maximized. As costs affect profits, trade-offs between two marginal costs - employees' wages and transport costs - may be important for decisions regarding location. Wages tend to be greater in industrial centres and decrease as transport costs increase. Trade shocks might impact regional wage disparities by making foreign markets, for example, relatively more attractive for firms than domestic markets. This paper tests these two hypotheses by using regional Brazilian data. Results corroborate that regions with higher transport costs present lower wages, and that trade shocks affect these regional wage disparities.

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    File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0046.pdf
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    Bibliographic Info

    Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0046.

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    Date of creation: Apr 2010
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    Handle: RePEc:cep:sercdp:0046

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    Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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    Keywords: Economic geography; trade shocks; manufacturing wages;

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    1. Rodríguez-Pose, Andrés & Arbixb, Glauco, 2000. "Strategies Of Waste: Bidding Wars In The Brazilian Automobile Sector," ERSA conference papers ersa00p505, European Regional Science Association.
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