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Regional heterogeneity in wage distributions. Evidence from Spain

Author

Listed:
  • Elisabet Motellón

    () (Faculty of Economics, University of Barcelona)

  • Enrique López-Bazo

    () (Faculty of Economics, University of Barcelona)

  • Mayssun El-Attar

    () (Faculty of Economics, University of Barcelona and European University Institute.)

Abstract

Regional differences in real wages have been shown to be both large and persistent in the U.S. and the U.K., as well as in the economies of other countries. Empirical evidence suggests that wage differentials adjusted for the cost of living cannot only be explained by the unequal spatial distribution of characteristics determining earnings. Rather, average wage gap decomposition reveals the important contribution made by regional heterogeneity in the price assigned to these characteristics. This paper proposes a method for assessing regional disparities in the entire wage distribution and for decomposing the effect of differences across regions in the endowments and prices of the characteristics. The hypothesis forwarded is that the results from previous studies obtained by comparing average regional wages may be partial and non-robust. Empirical evidence from a matched employer-employee dataset for Spain confirms marked differences in wage distributions between regions, which do not result from worker and firm characteristics but from the increasing role of regional differences in the return to human capital.

Suggested Citation

  • Elisabet Motellón & Enrique López-Bazo & Mayssun El-Attar, 2009. "Regional heterogeneity in wage distributions. Evidence from Spain," IREA Working Papers 200903, University of Barcelona, Research Institute of Applied Economics, revised Feb 2009.
  • Handle: RePEc:ira:wpaper:200903
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    File URL: http://www.ub.edu/irea/working_papers/2009/200903.pdf
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    Cited by:

    1. Hernández, Laura & Serrano, Lorenzo, 2012. "Overeducation and its effects on wages: a closer look at the Spanish regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 59-90.
    2. Aurora Galego & João Pereira, 2014. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: The Importance of Covariates," Environment and Planning A, , vol. 46(10), pages 2514-2532, October.
    3. Paula Herrera-Idárraga & Enrique López-Bazo & Elisabet Motellón, 2016. "Regional Wage Gaps, Education and Informality in an Emerging Country: The Case of Colombia," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(4), pages 432-456, October.

    More about this item

    Keywords

    Regional Labour Markets; Human Capital; Wage Gap Decomposition; Counterfactual Distributions;

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