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Determinants of Spatial Weights in Spatial Wage Equations: A Sensitivity Analysis within a Consistent Framework

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Author Info

  • Gabriel Ahlfeldt

    ()
    (Chair for Economic Policy, University of Hamburg)

  • Arne Feddersen

    ()
    (Chair for Economic Policy, University of Hamburg)

Abstract

Recent 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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File URL: http://www.hced.uni-hamburg.de/WorkingPapers/022.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by Chair for Economic Policy, University of Hamburg in its series Working Papers with number 022.

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Length: 33 pages
Date of creation: 2008
Date of revision:
Publication status: Published in Hamburg Contemporary Economic Discussions, Issue 22, 2008
Handle: RePEc:hce:wpaper:022

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Related research

Keywords: Market Potential; Nominal Wage Equation; New Economic Geography; Sensitivity Analysis;

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Cited by:
  1. Fischer, Justina AV & Sousa-Poza, Alfonso, 2010. "The impact of institutions on firms’ rejuvenation policies: Early retirement with severance pay versus simple lay-off. A Cross-European Analysis," MPRA Paper 20343, University Library of Munich, Germany.
  2. Ulrich Zierahn, 2012. "The effect of market access on the labor market: Evidence from German reunification," MAGKS Papers on Economics 201239, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. Torberg Falch & Justina AV Fischer, 2008. "Public sector decentralization and school performance. International evidence," TWI Research Paper Series 39, Thurgauer Wirtschaftsinstitut, Universität Konstanz.

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