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Alternative theories for explaining the spatial wage inequality: a multilevel competition among human capital, NEG and amenities

  • Dusan Paredes


    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

This paper presents an empirical framework for analyzing the spatial wage inequality in a Latin American country: Chile. This country is mainly characterized by two stylized facts: the high spatial concentration around metropolitan areas and the key role of natural resources. We consider both elements with a competition between NEG versus amenity framework. Both theories are combined with human capital through a Multilevel Analysis. The results show the low performance of NEG for Chile and how the natural resources are a winner causal mechanism for the case. Additionally, the spatial wage variability is extremely small when it is compared with the wage variation at individual level.

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Paper provided by Universidad Catolica del Norte, Chile, Department of Economics in its series Documentos de Trabajo en Economia y Ciencia Regional with number 20.

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Length: 24 pages
Date of creation: Apr 2012
Date of revision: Apr 2012
Handle: RePEc:cat:dtecon:dt201206
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  1. Bernard Fingleton, 2004. "The new economic geography versus urban economics : an evaluation using local wage rates in Great Britain," ERSA conference papers ersa04p638, European Regional Science Association.
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  7. Combes, Pierre-Philippe & Lafourcade, Miren & Thisse, Jacques-François & Toutain, Jean-Claude, 2008. "The Rise and Fall of Spatial Inequalities in France: a Long-Run Perspective," CEPR Discussion Papers 7017, C.E.P.R. Discussion Papers.
  8. 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.
  9. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2006. "Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 613-635, September.
  10. Marius Brülhart & Pamina Koenig, 2005. "New Economic Geography meets Comecon: Regional Wages and Industry Location in Central Europe," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.01, Université de Lausanne, Faculté des HEC, DEEP.
  11. Dusan Paredes, 2015. "Can Neg Explain the Spatial Distribution of Wages of Chile?," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(1), pages 65-77, 02.
  12. Fingleton, Bernard, 2008. "Competing models of global dynamics: Evidence from panel models with spatially correlated error components," Economic Modelling, Elsevier, vol. 25(3), pages 542-558, May.
  13. Fingleton, Bernard, 2009. "Simulating Wages and House Prices Using the NEG," SIRE Discussion Papers 2009-33, Scottish Institute for Research in Economics (SIRE).
  14. Luisa Corrado & Bernard Fingleton, 2011. "Where is the Economics in Spatial Econometrics?," Working Papers 1101, University of Strathclyde Business School, Department of Economics.
  15. Laura Hering & Sandra Poncet, 2010. "Market access and individual wages: evidence from China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633785, HAL.
  16. Kanbur, Ravi & Venables, Anthony J., 2005. "SPATIAL INEQUALITY AND DEVELOPMENT Overview of UNU-WIDER Project," Working Papers 127127, Cornell University, Department of Applied Economics and Management.
  17. S. Brakman & H Garretsen & M. Schramm, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-08, Utrecht School of Economics.
  18. Iturra, Victor & Paredes - Araya, Dusan, 2011. "Construction of a Spatial Housing Price Index by Estimating an Almost Ideal Demand System," MPRA Paper 30581, University Library of Munich, Germany.
  19. Tony Venables, 2003. "Spatial disparities in developing countries: cities, regions and international trade," LSE Research Online Documents on Economics 2038, London School of Economics and Political Science, LSE Library.
  20. Graves, Philip E., 1979. "A life-cycle empirical analysis of migration and climate, by race," MPRA Paper 19921, University Library of Munich, Germany.
  21. Geoffrey J. D. Hewings & Patricio Aroca, 2002. "Migration and regional labor market adjustment: Chile 1977-1982 and 1987-1992," The Annals of Regional Science, Springer, vol. 36(2), pages 197-218.
  22. Dumond, J Michael & Hirsch, Barry T & Macpherson, David A, 1999. "Wage Differentials across Labor Markets and Workers: Does Cost of Living Matter?," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 577-98, October.
  23. Patricio Aroca & Miguel Atienza, 2010. "Economic Implications of Long Distance Commuting in the Chilean Mining Industry," Documentos de Trabajo en Economia y Ciencia Regional 03, Universidad Catolica del Norte, Chile, Department of Economics, revised Oct 2010.
  24. Bernard Fingleton, 2005. "Beyond neoclassical orthodoxy: A view based on the new economic geography and UK regional wage data," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 351-375, 08.
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