Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2004-05-12
Number: 04-054/3
Author-Name: Simonetta Longhi
Author-Email: longhi@tinbergen.nl
Author-Workplace-Name: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam
Author-Name: Peter Nijkamp
Author-Email: pnijkamp@feweb.vu.nl
Author-Workplace-Name: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam
Author-Name: Jacques Poot
Author-Email: jpoot@waikato.ac.nz
Author-Workplace-Name: University of Waikato, Hamilton, New Zealand
Title: Spatial Heterogeneity and the Wage Curve revisited
Abstract: Most ‘wage curve’ studies treat local labour markets as independent ‘islands’ in the national economy. However, when a local labour market is in close proximity of other labour markets, a local shock that increases unemployment may not lead to lower pay rates if employers fear outward migration of their workers. Hence, the unemployment elasticity of pay will be greater, the more isolated the local labour market is. Wages are also expected to be higher in regions that interact strongly with other regions. These hypotheses are confirmed by means of an estimation of wage curves with data for 327 regions of western Germany over the period 1990-97.
Classification-JEL: J21; J30; R23
Keywords: Unemployment; wage formation; spatial analysis; local monopsony; Germany
File-Url: https://papers.tinbergen.nl/04054.pdf
File-Format: application/pdf
File-Size: 746137 bytes
Handle: RePEc:tin:wpaper:20040054