This paper addresses the issue of wage specification in interregional econometric models. Several shortcomings in commonly used regional wage specifications are demonstrated, and a new inter-regional wage specification is developed. It is based on a wage transmission variable that is simple to construct and that can be applied uniformly to diverse regions. Empirical tests demonstrate the usefulness of this specification.
Get full access to this article
View all access options for this article.
References
1.
Ballard, K. P.
, Gustely, R. D., and Wendling, R. M.1980. NRIES: Structure, performance, and application of a bottom-up interregional econometric model. Washington, D.C.: U.S. Government Printing Office.
2.
Beaumont, P.
, Isserman, A., Rogerson, P., McMillen, D., Plane, D.1982. The ECESIS economic-demographic interregional model of the United States. ASA/Census Working Paper 3. The Institute of Urban and Regional Research, The University of Iowa.
3.
Behman, Sara
. 1964. Labor mobility, increasing labor demand, and money wage-rate increases in United States manufacturing. Review of Economic Studies31: 253-266.
4.
Brechling, F.1973. Wage inflation and the structure of regional unemployment. Journal of Money, Credit, and Banking1, 5: 355-379.
5.
Eckstein, O.
and Wilson, T. A.1962. The determination of money wages in American industry. Quarterly Journal of Economics76: 379-414.
6.
Hart, R. A.
and MacKay, D. I.1977. Wage inflation, regional policy and the regional earnings structure. Econometrica44: 267-281.
7.
Gerking, Shelby D.
, and Weirick, William N.1983. Compensating differences in interregional wage differentials. Review of Economics and Statistics (forthcoming).
8.
Glickman, Norman J.1977. Econometric analysis of regional systems. New York: Academic Press.
9.
Izraeli, Oded
and Kellman, Mitchell. 1979. Changes in money wage rates and unemployment in local labor markets: the latest evidence. Journal of Regional Science19, 3: 375-387.
10.
Klein, L. R.1969. The specification of regional econometric models. Papers and Proceedings of the Regional Science Association23: 105-115.
11.
Marcis, Richard G.
and Reed, J. David. 1974. Joint estimation of the determinants of wages in subregional labor markets in the United States: 1961-1972. Journal of Regional Science14, 2: 259-267.
12.
Mathur, V. K.1976. The relation between rate of change of money wage rates and unemployment in local labor markets: some new evidence. Journal of Regional Science16: 389-398.
13.
Mehra, Y. P.1976. Spillovers in wage determination in U.S. manufacturing industries. The Review of Economics and Statistics58, 3: 300-312.
14.
Milne, Willaim J. 1980. A multiregional econometric model of the United States: An application to the Northeast. Ph.D. dissertation, University of Pennsylvania.
15.
Milne, W.
, Glickman, N., and Adams, F.1980. A framework for analyzing regional growth and decline: a multiregion model of the United States. Journal of Regional Science20, 2: 173-189.
16.
Reed, J. David
and Hutchinson, Peter M.1976. An empirical test of a regional Phillips curve and wage rate transmission mechanism in an urban hierarchy. Annals of Regional Science10: 19-30.
17.
Rees, Albert
and Hamilton, Mary T.1967. The wage-price-productivity perplex. The Journal of Political Economy75, 1: 63-70.
18.
Reza, Ali M.1978. Geographical differences in earnings and unemployment rates. The Review of Economics and Statistics60, 2: 201-208.
19.
Rubin, Barry M.
1979. Further evidence on the metropolitan region labor market unemployment-inflation adjustment mechanism. Paper delivered at the Regional Science Association Meetings, Los Angeles.