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Regional heterogeneity in wage distributions. Evidence from Spain

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Author Info

  • Elisabet Motellón

    ()
    (Faculty of Economics, University of Barcelona)

  • Enrique López-Bazo

    ()
    (Faculty of Economics, University of Barcelona)

  • Mayssun El-Attar

    ()
    (Faculty of Economics, University of Barcelona and European University Institute.)

Abstract

Regional differences in real wages have been shown to be both large and persistent in the U.S. and the U.K., as well as in the economies of other countries. Empirical evidence suggests that wage differentials adjusted for the cost of living cannot only be explained by the unequal spatial distribution of characteristics determining earnings. Rather, average wage gap decomposition reveals the important contribution made by regional heterogeneity in the price assigned to these characteristics. This paper proposes a method for assessing regional disparities in the entire wage distribution and for decomposing the effect of differences across regions in the endowments and prices of the characteristics. The hypothesis forwarded is that the results from previous studies obtained by comparing average regional wages may be partial and non-robust. Empirical evidence from a matched employer-employee dataset for Spain confirms marked differences in wage distributions between regions, which do not result from worker and firm characteristics but from the increasing role of regional differences in the return to human capital.

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File URL: http://www.ub.edu/irea/working_papers/2009/200903.pdf
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Bibliographic Info

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200903.

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Length: 35 pages
Date of creation: Feb 2009
Date of revision: Feb 2009
Handle: RePEc:ira:wpaper:200903

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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Related research

Keywords: Regional Labour Markets; Human Capital; Wage Gap Decomposition; Counterfactual Distributions;

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Cited by:
  1. Aurora Galego & João Pereira, 2013. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: the Importance of Covariates," CEFAGE-UE Working Papers 2013_16, University of Evora, CEFAGE-UE (Portugal).
  2. Hernández, Laura & Serrano, Lorenzo, 2012. "Overeducation and its effects on wages: a closer look at the Spanish regions," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 24, pages 59-90.

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