Working Paper: NBER ID: w9998
Authors: Andrew B. Bernard; Stephen Redding; Peter K. Schott; Helen Simpson
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.
Keywords: No keywords provided
JEL Codes: F11; F14; C14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low skill premia (J31) | different sets of manufacturing industries (L60) |
| relative wages (J31) | industrial composition (L69) |
| initial wage conditions (J31) | growth of specific industries (O25) |
| relative wages (J31) | subsequent economic development (O29) |