DP5111 Factor Price Equality and the Economies of the United States
|Author(s):||Andrew B. Bernard, Stephen J. Redding, Peter K. Schott|
|Publication Date:||June 2005|
|Keyword(s):||factor price equality, labour market areas, neoclassical trade theory, regional wages|
|JEL(s):||C14, F16, J30, R23|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5111|
We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labour markets in both 1972 and 1992. These deviations vary systematically with labour markets’ industry structure both in cross section and over time.