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Spatial determinants of sectors wage inequaities: Analysis for the region of Croatia


  • Vinko Mustra


  • Blanka Skrabic
  • Pasko Burnac


The regional studies have shown that regional disparities within the countries appear to persist or even to grow. One of the most important indicators of the disparities is regional wage level. It is widely accepted that spatial effects have a different impact among sectors in developed countries. The traditional core-periphery pattern of manufacturing is weakening which tends to work towards regional convergence and on the other hand service industries continue to concentrate in high-density areas thus reinforcing divergence. However, there is less evidence for these effects for developing countries. This paper uses NUTS3 sub-regional data for Croatia from year 2000 onward to investigate the sources of the regional wages differences on the sector level. The recent literature recognizes two main determinants of spatial differences in wages; namely, the productivity and occupational composition. Therefore the paper uses shift-share analysis to decompose the spatial variation of wages into productivity effect and occupational composition effect exploring how the spatial variance in wages is attributable to variations in these effects among different sectors. The paper also examines the relationship between these two determinants of spatial differences and the proximity to economic mass instrumented by different measures of urbanization in the NUTS3 sub-regions.

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  • Vinko Mustra & Blanka Skrabic & Pasko Burnac, 2011. "Spatial determinants of sectors wage inequaities: Analysis for the region of Croatia," ERSA conference papers ersa10p573, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p573

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    References listed on IDEAS

    1. Rice, Patricia & Venables, Anthony J. & Patacchini, Eleonora, 2006. "Spatial determinants of productivity: Analysis for the regions of Great Britain," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 727-752, November.
    2. Sylvain Barde, 2008. "The spatial structure of French wages : Investigating the robustness of two-stage least squares estimations of spatial autoregressive models," Working Papers hal-01066157, HAL.
    3. Kurt Geppert & Andreas Stephan, 2008. "Regional disparities in the European Union: Convergence and agglomeration," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 193-217, June.
    4. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    5. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc.
    6. Bottazzi, Giulio & Dosi, Giovanni & Fagiolo, Giorgio & Secchi, Angelo, 2008. "Sectoral and geographical specificities in the spatial structure of economic activities," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 189-202, September.
    7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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