39 Pages Posted: 20 Sep 2009
Date Written: August 1, 2009
We develop a method for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this method to the United States reveals substantial and increasing deviations in relative skilled wages across labor markets in both 1972 and 1992. These deviations vary systematically with labor markets industry structure both in the cross section and over time.
Keywords: Factor Price Equality, Regional Wages, Neoclassical Trade Theory, Labor Market
JEL Classification: F16, J30, R23, C14
Suggested Citation: Suggested Citation
Bernard, Andrew B. and Redding, Stephen J. and Schott, Peter K., Testing for Factor Price Equality in the Presence of Unobserved Factor Quality Differences (August 1, 2009). Tuck School of Business Working Paper No. 2009-71; US Census Bureau Center for Economic Studies Paper No. CES-WP 09-22. Available at SSRN: https://ssrn.com/abstract=1475708 or http://dx.doi.org/10.2139/ssrn.1475708