Why do empirical tests tend to accept the NEG?- An alternative approach to the 'wage equation' in European regions
Title
Why do empirical tests tend to accept the NEG?- An alternative approach to the 'wage equation' in European regionsAuthor(s)
Date
2015-10Center/Dept./Entity
Departamento de Análise Económica, Grupo C+DAbstract
[Abstract]This paper posits a new approach to the ‘wage equation’ of the New Economic Geography (NEG) stressing the uncertain interpretation of its empirical results. It emphasizes the generality of the variable to be explained, marginal costs. Then, two artificial (no-NEG) tests are proposed in order to identify the statistical features explaining why wage-type equations tend to be accepted in tests for European data. The estimation results are shown to be similar not only when Market Potential is built for variables that do not measure market size but also when the focus of attention changes from global to local spatial patterns.
Keywords
New economic geography
Wage equation
Market potential
Spillovers
Global trend
Spatial autocorrelation
Wage equation
Market potential
Spillovers
Global trend
Spatial autocorrelation
Editor version
Rights
Reconocimiento 4.0 Internacional
ISSN
1696-6376