What explains the spatial distribution of wages across US counties? I find that two of the most important factors are spatial technology diffusion and externalities due to the aggregate scale of production. One empirical finding supporting the importance of spatial technology diffusion is that average wages in a county decrease with the average level of schooling in neighboring counties when employment in the county and average wages in neighboring counties are held constant. All empirical results are obtained using a novel instrument for (endogenous) employment at the county-level and take into account other factors (e.g. productivity-differences across states, climate) that may determine wages.
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number
500.
Find related papers by JEL classification: O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General
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