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Factor Price Equality and the Economies of the United States

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  • Bernard, Andrew
  • Redding, Stephen J
  • Schott, Peter

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 labour markets in both 1972 and 1992. These deviations vary systematically with labour markets’ industry structure both in cross section and over time.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5111.

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Date of creation: Jun 2005
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Handle: RePEc:cpr:ceprdp:5111

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Keywords: factor price equality; labour market areas; neoclassical trade theory; regional wages;

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