Andrew Bernard (Institute for Fiscal Studies and Dartmouth University) Stephen Redding () (Institute for Fiscal Studies and University College London) Peter Schott (Institute for Fiscal Studies and Yale University) Helen Simpson () (Institute for Fiscal Studies and CMPO, Bristol)
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Relative wages vary considerably across regions of the United Kingdom, with skill-abundant regions exhibiting lower skill premia than skill-scarce regions. This paper shows that the location of economic activity is correlated with the variation in relative wages. U.K. regions with low skill premia produce different sets of manufacturing industries than regions with high skill premia. Relative wages are also linked to subsequent economic development: over time, increases in the employment share of skill-intensive industries are greater in regions with lower initial skill premia. Both results suggest firms adjust production across and within regions in response to relative wage differences.
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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number
W03/17.
Length: 26 pp Date of creation: Sep 2003 Date of revision: Handle: RePEc:ifs:ifsewp:03/17
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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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