Regional Wage Inequality Research Articles

Inequality of Labor Income in Kazakhstan’s Regions: Trends, Causes and Opportunities for Reduction

In the modern world, income inequality is growing, the share of labor income is decreasing, and the problems of overcoming poverty and equalizing people’s living standards have become acute. The article aimed to study trends in regional and sectoral inequality of labor income in Kazakhstan, identify contradictions and causes of their differentiation, and develop recommendations for reduction. The hypothesis: the assumption that the size of regional inequality of labor income depends on the sectoral specialization of the regional economy. Tasks: review theoretical issues of income inequality, analyze wage trends in Kazakhstan’s regions and their primary industries, and develop recommendations to reduce income inequality. The proof/refutation of the hypothesis was carried out by assessing regional and sectoral differences in the labor incomes of Kazakhstanis and identifying their contradictions. The methods are generalization and concretization, comparisons and analogs, systematic approach, economic and statistical, comparative analysis, Pareto, and indicative. Information base: domestic and foreign scientists’ works, data from the Bureau of National Statistics of the Republic of Kazakhstan, and regional statistical services. Results: the methods of overcoming income inequality in world practice were identified; it was proved that despite wage growth, the share of labor income is decreasing; regional wage inequality in Kazakhstan in 2022 amounted to 2.3 times. It is recommended that regional inequality of labor income be reduced by introducing regional coefficients and shifting taxation from labor income to income from capital and property.

Regional Inequalities in Nineteenth-Century Female Wages: Evidence from Belgium

Abstract Although recent studies on the geography of the female labor force have highlighted strong spatial variation in women’s labor market participation, little is known about regional female wage inequalities in nineteenth-century industries. An analysis of female regional wage inequality for late-nineteenth-century Belgium, a country known for its early industrialization, finds a positive correlation between female industrial employment and wage levels, underlining the importance of industrial labor demand in shaping the female labor market experience. This finding is augmented by a correlational analysis of various market drivers.

Trade direction, market access and regional wage inequality: An explanation based on asymmetric trade costs

AbstractWe introduce the trade frictions between wealthy and impoverished regions into the New Economic Geography model. We argue that to reconcile bilateral trade volumes and price data within a standard gravity model, the trade frictions between regions must be systematically asymmetric, with poor regions facing higher costs to export relative to affluent regions. We construct the corresponding econometric model based on the theoretical formulation, and the results show that the asymmetry of trade costs has a significant impact on regional market access and wages. We then argue that these trade frictions are quantitatively crucial and without the asymmetry of trade costs, the standard deviation of market access among Chinese provinces would decline by 13.9%, while that of relative wages would decline by 16.1%.

Education Development and Wage Inequality in Urban China

Using a representative household survey for 1995, 2002, 2007, and 2013, we show that education plays a pivotal role in shaping wage inequality in urban China. We find that education was a major contributor to increased wage inequality between 1995 and 2013. The returns to education remained high after 2007 despite a large inflow of college-educated workers. Although regional wage inequality declined from 2007–13, regional wage inequality among educated workers did not. Residual wage inequality increased, and the within inequality of educated workers increased faster than that of the less educated. We argue that China's education expansion seems insufficient to narrow the educational wage gap, and a lack of labor mobility for educated workers prevents the decline in returns to education in specific regions.

International Trade, Technology Change and Chinese Regional Wage Inequality-Based on Quantile Regression Method

The paper analyzes the panel data in China during the period 1997-2015 with quantile regression method to confirm the determinants of regional wage inequality. The results show that international trade in terms of import and export is the main factor responsible for the increasing wage inequality, while the technology change measured by the expense of RD has various influences on different Chinese regions, it’s found that in relation to the study of wage inequality and technology change, wage level in the regions of the most and the least expense of RD are relatively more sensible to technology change, when combined with the other variables considered, it’s inferred that regional wage inequality is negatively related to technology change. In the last part, some economic policy suggestions are proposed.

Regional Wage Gaps, Education and Informality in an Emerging Country: The Case of Colombia

This paper uses Colombian micro-data to analyze the role of education and informality in regional wage differentials. The hypothesis is that apart from differences in the endowment of human capital, regional heterogeneity in the incidence of informality is another important source of regional wage inequality in emerging countries. This is confirmed by the evidence from Colombia, which also reveals remarkable spatial heterogeneity in the wage return to individuals’ characteristics. Regional heterogeneity in returns to education is especially intense in the upper part of the wage distribution. In turn, heterogeneity in the informal pay penalty is more relevant at the bottom.

THE IMPACT OF MIGRATION ON REGIONAL WAGE INEQUALITY: A SEMIPARAMETRIC APPROACH

ABSTRACTAccording to economic theory, regional migration is a primary mechanism through which regional wage convergence is predicted to occur. However, this does not necessarily imply that regional migration has an equalizing effect on regional inequality. Despite considerable literatures on regional migration and regional wage inequality, little attention has focused on the relationship between the two. This paper investigates one of the primary mechanisms through which migration affects individual region's wage distributions. It adopts a semiparametric procedure to examine how the regional wage distributions in Great Britain have changed as a result of migration using British Household Panel Survey data for 1991–2007.

The Uneven Geography of Racial and Ethnic Wage Inequality: Specifying Local Labor Market Effects

This article extends research on intermetropolitan and regional wage inequality through an investigation of the uneven geography of racial and ethnic wage inequality across metropolitan labor markets. Prior geographic studies largely restricted analysis of the source of intermetropolitan wage disparities to differences in industrial structure. The study described in this article further expands the analysis of labor market effects by conceptually describing and empirically analyzing the effects of three significant racial labor market institutions: public employment, unionization, and the penal system. I investigate these effects as part of a more extensive analysis of how local labor market structure—comprised of industrial mix, demographic composition, and institutional and regulatory arrangements—matters in mediating racial wage inequality. I use data from the 2000 U.S. Census and multilevel methods to analyze the wage differentials of African American and native- and foreign-born Latino men relative to whites across 186 U.S. metropolitan areas. Local labor market structure mediates different types of racial wage inequality in distinct ways: Regulatory context matters most for the relative wages of African Americans; both regulatory context and industrial mix influence the relative wages of native-born Latinos; and industrial composition matters most for the relative wages of foreign-born Latinos. Against these broad patterns of difference, not all effects—especially regulatory and institutional effects—are singularly group specific. Unionization shores up wages for both white and black high school–educated workers and mitigates racial wage inequality. Higher minimum wage rates boost the relative wages of high school–educated whites and native-born Latinos.

Regional Wage Inequality in China, 1996-2010

This paper examines regional wage inequality in China between 1996 to 2010, subdividing that time span into a period of increased wage inequality during 1996-2002 and one of stable to decreasing inequality for 2003-2010. Based on the interplay between wage levels and wage growth, the authors develop a typology whereby China's provinces can be assigned to either peripheral, emerging, lagging, or leading regions. The particular characteristics associated with each type of wage region, and the factors underlying shifts of particular provinces from one category to another between the two periods, enable them to identify specific causes for the reversal (after 2002) of the trend toward increasing wage inequality (the causes especially reflect wage patterns in the mining and energy industries, information and communication technology industries, and foreign-invested enterprises). The recent wage convergence involves instances of both interior provinces advancing from the "emerging" to the "leading" wage category as well as the decline of a few "leading" coastal provinces to "lagging" status.

The Internet and Local Wages: A Puzzle

How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business investment in advanced internet technology and local variation in US wage growth between 1995 and 2000. We identify a puzzle. The internet is widespread, but the economic payoffs are not. Advanced internet technology is only associated with substantial wage growth in the 6 percent of counties that were already highly wealthy, educated, and populated and had IT-intensive industry. Advanced internet and wage growth appear unrelated elsewhere. Overall, advanced internet explains over half the difference in wage growth between already well-off counties and all others. JEL: J31, L86, O33, R11, R23

Marshallian theory of regional agglomeration

AbstractMost models of regional agglomeration are based on the new economic geography (NEG) model in which returns to scale are pecuniary. We investigate the implications for regional agglomeration of a ‘Marshallian’ model in which returns to scale derive from technological externalities. Workers are assumed to have heterogeneous ‘home region’ preferences. The model is designed to explain how ‘second nature’ determines regional wage inequality and the regional distribution of economic activity. We show that agglomeration is not a necessary outcome of Marshallian externalities. However, if centrifugal or positive externalities are sufficiently strong relative to their centripetal or negative counterparts, the model generates multiple agglomerating equilibria. These equilibria multiply if, in addition, there are scale economies in amenities. A dynamic version of the model is developed in which external economies and inter‐regional labour mobility grow over time. Regional wage inequality overshoots its long run equilibrium and, there is more agglomeration in the long run.ResumenLa mayoría de modelos de aglomeración regional están basados en el modelo de la nueva geografía económica (NEG, por sus siglas en inglés) en el que los retornos de escala son monetarios. Investigamos las implicaciones para la aglomeración regional de un modelo “marshaliano” en el que los retornos de escala provienen de externalidades tecnológicas. Se asume que los trabajadores tienen preferencias heterogéneas en cuanto a su región local. El modelo está diseñado para explicar como lo “instintivo” determina la desigualdad salarial regional y la distribución regional de la actividad económica. Mostramos que la aglomeración no es necesariamente un resultado de externalidades marshalianas. Sin embargo, si las externalidades centrífugas o positivas son lo suficientemente poderosas en relación a sus contrapartidas centrípetas o negativas, el modelo genera múltiples equilibrios de aglomeración. Estos equilibrios se multiplican si además hay economía de escala en servicios. Se desarrolla una versión del modelo en el que las economías externas y la movilidad de mano de obra interregional crecen con el tiempo. La desigualdad de salarios regional excede su equilibrio a largo plazo y a la larga hay más aglomeración.

Down from the Mountain: Skill Upgrading and Wages in Appalachia

Despite evidence that skilled labor is increasingly concentrated in cities, whether regional wage inequality is predominantly due to differences in skill levels or returns is unknown. We compare Appalachia, with its wide mix of urban and rural areas, to other parts of the U.S., and find that gaps in both skill levels and returns account for the lack of high wage male workers. For women, skill shortages are important across the distribution. Because rural wage gaps are insignificant, our results suggest that widening wage inequality between Appalachia and the rest of the U.S. owes to a shortage of skilled cities.

Education, cost of living and regional wage inequality in Brazil

Abstract The objective of this article is to analyze wage inequality among the 10 largest metropolitan regions in Brazil in the 1990s. We assess the extent to which worker characteristics (education, age, gender, race, position in the family) and job characteristics (occupational position, sector, experience) can explain wage inequality. The analysis is made both with regional‐nominal and with regional‐real wage data. In the second case regional price indexes are used to control for differences in cost of living among regions. Wage differentials in Brazil were slightly lowered when control variables were introduced, but the leftover inequality remained high. The results indicate that cost of living levels do have a role in explaining wage inequality in Brazil, but even after controlling for this factor, the remaining regional differentials are still important.

Education, cost of living and regional wage inequality in Brazil

The objective of this article is to analyze wage inequality among the 10 largest metropolitan regions in Brazil in the 1990s. We assess the extent to which worker characteristics (education, age, gender, race, position in the family) and job characteristics (occupational position, sector, experience) can explain wage inequality. The analysis is made both with regional-nominal and with regional-real wage data. In the second case regional price indexes are used to control for differences in cost of living among regions. Wage differentials in Brazil were slightly lowered when control variables were introduced, but the leftover inequality remained high. The results indicate that cost of living levels do have a role in explaining wage inequality in Brazil, but even after controlling for this factor, the remaining regional differentials are still important.