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Trade, location, and wages in the United States

  • Knaap, Thijs

Abstract This paper estimates a spatial wage structure for the United States. I employ the market-access and supplier-access method of Redding and Venables (2004), where access is determined using interstate trade data. Economic geography models predict that state-level wages are correlated to this measure, owing to higher levels of demand and better availability of intermediate goods in easily accessible regions. After correcting for omitted-variable bias with exogenous ‘first nature’ regressors and using the appropriate instruments, I find that the explanatory power of access-variables is weak in this dataset. Keywords: Spatial wage structure, United States, Economic Geography

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 36 (2006)
Issue (Month): 5 (September)
Pages: 595-612

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Handle: RePEc:eee:regeco:v:36:y:2006:i:5:p:595-612
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  17. Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
  18. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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