Technology Diffusion and the Spatial Distribution of Wages in the U.S.
UPF Economics & Business Working Paper No. 500
25 Pages Posted: 8 Nov 2000
Date Written: December 1999
What explains the spatial distribution of wages across U.S. counties? I find that two of the most important factors are spatial technology diffusion and externalities due to the aggregate scale of production. One empirical finding supporting the importance of spatial technology diffusion is that average wages in a county decrease with the average level of schooling in neighboring counties when employment in the county and average wages in neighboring counties are held constant. All empirical results are obtained using a novel instrument for (endogenous) employment at the county-level and take into account other factors (e.g., productivity-differences across states, climate) that may determine wages.
Keywords: U.S. spatial wage distribution, spatial technology diffusion, dynamic spatial externalities, spatial fixed effects
JEL Classification: O30, O40, R10
Suggested Citation: Suggested Citation