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Inter-Regional Wage Dispersion in Portugal

Author

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  • Vieira, José António Cabral

    () (University of the Azores)

  • Couto, João Pedro Almeida

    () (University of the Azores)

  • Borges Tiago, Maria Teresa

    () (University of the Azores)

Abstract

This paper examines the size o inter-regional wage dispersion in Portugal. For this purpose, we estimate a Mincer-type human capital wage equation, including controls for a large number of regions, and calculate a weighted and adjusted standard deviation (WASD) of inter-regional wage differentials. The value is high and quite stable over time. The highest wages are found in the region of Lisbon. Moreover, the results are quite sensitive to inclusion of human capital and industry controls. A decomposition analysis reveals that differences average years of education and in the return to education across regions account for a significant fraction of observed wage differentials.

Suggested Citation

  • Vieira, José António Cabral & Couto, João Pedro Almeida & Borges Tiago, Maria Teresa, 2005. "Inter-Regional Wage Dispersion in Portugal," IZA Discussion Papers 1664, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1664
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    References listed on IDEAS

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    1. Paulo Madruga & José Vieira, 2004. "Regions and Low-Wage Mobility in Portugal," ERSA conference papers ersa04p55, European Regional Science Association.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    3. 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.
    4. Vieira, J.A.C. & Couto, J.P.A. & Tiago, M.T.B., 2006. "Inter-regional Wage Dispersion in Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(1).
    5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    6. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    7. 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 577-598, October.
    8. Oosterbeek, Hessel & van Praag, Mirjam, 1995. "Firm-Size Wage Differentials in the Netherlands," Small Business Economics, Springer, vol. 7(3), pages 173-182, June.
    9. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    10. Edin, Per-Anders & Zetterberg, Johnny, 1992. "Interindustry Wage Differentials: Evidence from Sweden and a Comparison with the United States," American Economic Review, American Economic Association, vol. 82(5), pages 1341-1349, December.
    11. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-243, May.
    12. Gilles Duranton & V Monastiriotis, 2000. "Mind the Gaps: the Evolution of Regional Inequalities in the UK, 1982-1997," CEP Discussion Papers dp0485, Centre for Economic Performance, LSE.
    13. Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 99-122, January.
    14. Inmaculada Garcia & Jose Alberto Molina, 2002. "Inter-regional wage differentials in Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 9(4), pages 209-215.
    15. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 219-256.
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    Citations

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    Cited by:

    1. Vieira, J.A.C. & Couto, J.P.A. & Tiago, M.T.B., 2006. "Inter-regional Wage Dispersion in Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(1).
    2. Murillo Huertas, Inés P. & Ramos, Raul & Simón, Hipólito, 2017. "Revisiting Interregional Wage Differentials: New Evidence from Spain with Matched Employer-Employee Data," IZA Discussion Papers 11122, Institute for the Study of Labor (IZA).
    3. 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.
    4. Vizer, David, 2011. "Behind the North-South divide: A decomposition analysis," MPRA Paper 28364, University Library of Munich, Germany.
    5. Adelaide Duarte & Marta Simões, 2009. "Channels of transmission of inequality to growth: A survey of the theory and evidence from a Portuguese perspective," GEMF Working Papers 2009-07, GEMF, Faculty of Economics, University of Coimbra.
    6. João Gabriel Fidalgo & Marta Simões & Adelaide Duarte, 2010. "Mind the Gap: Education Inequality at the Regional Level in Portugal, 1986-2005," Notas Económicas, Faculty of Economics, University of Coimbra, issue 32, pages 22-43, December.
    7. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," PSE Working Papers halshs-00586795, HAL.
    8. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," Working Papers halshs-00586795, HAL.
    9. Joao Pereira & Aurora Galego, 2013. "Intra-Regional Regional Wage Inequality In Portugal: A Quantile Based Decomposition Analisys," ERSA conference papers ersa13p158, European Regional Science Association.
    10. Aleksey Oshchepkov, 2007. "Are Interregional Wage Differentials in Russia Compensative?," Discussion Papers of DIW Berlin 750, DIW Berlin, German Institute for Economic Research.
    11. Budria, Santiago, 2007. "Economic Inequality in Portugal: A Picture in the Beginnings of the 21st century," MPRA Paper 1784, University Library of Munich, Germany.

    More about this item

    Keywords

    regions; wages; human capital; Portugal;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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