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Regional wage convergence and divergence: adjusting wages for cost-of- living differences

  • Randall W. Eberts
  • Mark E. Schweitzer

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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Article provided by Federal Reserve Bank of Cleveland in its journal Economic Review.

Volume (Year): (1994)
Issue (Month): Q II ()
Pages: 26-37

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Handle: RePEc:fip:fedcer:y:1994:i:qii:p:26-37:n:v.30no.2
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  1. 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.
  2. 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.
  3. Mark E. Schweitzer, 1993. "Accounting for earnings inequality in a diverse work force," Working Paper 9314, Federal Reserve Bank of Cleveland.
  4. 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, vol. 14(3), pages 693-709, October.
  5. 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.
  6. 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.).
  7. 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.
  8. Lynn E. Browne, 1989. "Shifting regional fortunes: the wheel turns," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 27-40.
  9. Bellante, Don, 1979. "The North-South Differential and the Migration of Heterogeneous Labor," American Economic Review, American Economic Association, vol. 69(1), pages 166-75, March.
  10. 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.
  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, vol. 101(3), pages 410-42, June.
  12. Giora Hanoch, 1967. "An Economic Analysis of Earnings and Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 2(3), pages 310-329.
  13. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
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