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Trade, location, and wages in the United States

  • T. Knaap

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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Paper provided by Utrecht School of Economics in its series Working Papers with number 05-30.

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Date of creation: 2005
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Handle: RePEc:use:tkiwps:0530
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  1. Head, Keith & Mayer, Thierry, 2003. "The Empirics of Agglomeration and Trade," CEPR Discussion Papers 3985, C.E.P.R. Discussion Papers.
  2. Giuseppe De Arcangelis & Giordano Mion, 2002. "Spatial Externalities and Empirical Analysis: The case of Italy," SERIES 0006, Dipartimento di Scienze economiche e metodi matematici - Università di Bari, revised Jan 2002.
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  15. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
  16. Anthony J. Venables, 1993. "Equilibrium Locations of Vertically Linked Industries," CEP Discussion Papers dp0137, Centre for Economic Performance, LSE.
  17. Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 2003. "Trade, Growth, and the Size of Countries," Harvard Institute of Economic Research Working Papers 1995, Harvard - Institute of Economic Research.
  18. Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
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  22. Bernard Fingleton, 2005. "Testing the 'new economic geography': a comparative analysis based on EU regional data," Urban/Regional 0504003, EconWPA.
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