Relative Wage Variation and Industry Location

27 Pages Posted: 28 Sep 2003 Last revised: 29 Oct 2022

See all articles by Andrew B. Bernard

Andrew B. Bernard

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Stephen J. Redding

Princeton University

Peter K. Schott

Yale University - School of Management; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Helen Simpson

CMPO; Institute for Fiscal Studies (IFS)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2003

Abstract

Relative wages vary considerably across regions of the United Kingdom, with skill-abundant regions exhibiting lower skill premia than skill-scarce regions. This paper shows that the location of economic activity is correlated with the variation in relative wages. U.K. regions with low skill premia produce different sets of manufacturing industries than regions with high skill premia. Relative wages are also linked to subsequent economic development: over time, increases in the employment share of skill-intensive industries are greater in regions with lower initial skill premia. Both results suggest firms adjust production across and within regions in response to relative wage differences.

Suggested Citation

Bernard, Andrew B. and Redding, Stephen J. and Schott, Peter K. and Simpson, Helen, Relative Wage Variation and Industry Location (September 2003). NBER Working Paper No. w9998, Available at SSRN: https://ssrn.com/abstract=450898

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Stephen J. Redding

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Yale University - School of Management ( email )

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Helen Simpson

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