Determinants of Spatial Weights in Spatial Wage Equations: A Sensitivity Analysis within a Consistent Framework
AbstractRecent empirical tests for a spatial wage structure have confirmed regional accessibility to be a significant determinant for income, although estimates vary considerably with respect to the geographic scope of estimated demand linkages. Our study is the first to estimate spatial demand linkages for a set of more than 1,300 European NUTS 3 regions (U.S. county equivalent) based on effective road travel times. We conduct a series of more than 200 estimations on the basis of the Harris Market Potential Equation in order to evaluate the estimates’ sensitivity to various model alterations in a meta-analysis. In line with the distinct spatial interactions captured at different levels of aggregation, our estimates reveal lower average travel costs when data aggregated to larger geographic units are used. The largest sensitivity, however, is found for sample restrictions to a limited geographic coverage, which is likely to account for the inconsistent results available in the literature.
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Bibliographic InfoPaper provided by Chair for Economic Policy, University of Hamburg in its series Working Papers with number 022.
Length: 33 pages
Date of creation: 2008
Date of revision:
Publication status: Published in Hamburg Contemporary Economic Discussions, Issue 22, 2008
Market Potential; Nominal Wage Equation; New Economic Geography; Sensitivity Analysis;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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