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Regional Wage Convergence and Divergence: Adjusting Wages for Cost-of-Living Differences

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Abstract

An examination of the divergence of U.S. regional fortunes in the early 1980s, showing that once regional prices are factored in, relative wage rates continue to converge across regions. The trend in regional wage variation is also shown to be attributable to declining differences in labor market valuations of worker attributes, rather than to shifts in the regional composition of the workforce.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number rwe1994er2.

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Handle: RePEc:upj:weupjo:rwe1994er2

Note: Appears in Economic Review: Federal Reserve Bank of Cleveland 30(2): 26-37
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Keywords: wage differential; cost-of-living; regional issues;

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References

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  1. Gerking, Shelby D & Weirick, William N, 1983. "Compensating Differences and Interregional Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 483-87, August.
  2. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  3. Stuart A. Gabriel & Janice Shack-Marquez & William L. Wascher, 1988. "Regional labor markets, cost-of-living differentials, and migration," Working Paper Series / Economic Activity Section 91, Board of Governors of the Federal Reserve System (U.S.).
  4. Gerking, S.D. & Weirick, W.N., 1983. "Compensating differences and interregional wage differentials," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4742787, Tilburg University.
  5. Mark E. Schweitzer, 1993. "Accounting for earnings inequality in a diverse work force," Working Paper 9314, Federal Reserve Bank of Cleveland.
  6. Sahling, Leonard G & Smith, Sharon P, 1983. "Regional Wage Differentials: Has the South Risen Again?," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 131-35, February.
  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  8. Farber, Stephen C & Newman, Robert J, 1987. "Accounting for South/Non-South Real Wage Differentials and for Changes in Those Differentials over Time," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 215-23, May.
  9. Lynn E. Browne, 1989. "Shifting regional fortunes: the wheel turns," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 27-40.
  10. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  11. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  12. Randall W. Eberts, 1989. "Accounting for the recent divergence in regional wage differentials," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 14-26.
  13. Bellante, Don, 1979. "The North-South Differential and the Migration of Heterogeneous Labor," American Economic Review, American Economic Association, American Economic Association, vol. 69(1), pages 166-75, March.
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Cited by:
  1. George Hammond & Eric Thompson, 2002. "Mobility and Modality Trends in US State Personal Income," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(4), pages 375-387.
  2. Fousekis, Panos, 2007. "Convergence of Relative State-level Per Capita Incomes in the United States Revisited," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, Mid-Continent Regional Science Association, vol. 37(2).
  3. Todd Easton & Mary King, 2000. "Differences in Wage Levels Among Metropolitan Areas: Less-educated Workers in the United States," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 34(1), pages 21-27.
  4. Carolyn Sherwood-Call, 1996. "The 1980s divergence in state per capital incomes: what does it tell us?," Economic Review, Federal Reserve Bank of San Francisco, pages 14-25.
  5. Michael Beenstock & Daniel Felsenstein, 2003. "Decomposing the Dynamics of Regional Earnings Disparities in Israel," ERSA conference papers ersa03p90, European Regional Science Association.

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