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Regional Wage Disparities in Europe: What role for Market Access?

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Author(s): Jesús López-Rodríguez | Andrés Faíña

Journal: Investigaciones Regionales
ISSN 1695-7253

Issue: 11;
Start page: 5;
Date: 2007;
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Keywords: Economic Development | Economic Geography | Spatial structure | European Union

ABSTRACT
This paper uses a New Economic Geography model to test for wagedisparities in the European Union. We derive and estimate an econometric specificationrelating wages to a distance weighted sum of regional GDP’s. The empirical estimationsof the model were carried out for a sample of 160 NUTS2 regions in theEU15 for the year 2000 showing that geography of access to markets is statisticallysignificant and quantitatively important in explaining cross-region variation in Europeanwages. We also show that incentives for human capital accumulation and innovationactivities arising from market access size are also affecting the shaping of regionalwages in the European Union.

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