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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. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
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  22. 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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