Factor price equalisation in the UK

Andrew Bernard, Stephen Redding, Peter Schott and Helen Simpson

No W02/11, IFS Working Papers from Institute for Fiscal Studies

Abstract: This paper develops a general test of factor price equalization that is robust to unobserved regional productivity differences, unobserved region-industry factor quality differences and variation in production technology across industries. We test relative factor price equalization across regions of the UK. Although the UK is small and densely-populated, we find evidence of statistically significant and economically important departures from relative factor price equalization. Our estimates suggest three distinct relative factor price areas with a clear spatial structure. We explore explanations for these findings, including multiple cones of diversification, region-industry technology differences, agglomeration and increasing returns to scale.

JEL-codes: C14 F11 F14 (search for similar items in EconPapers)
Pages: 65 pp
Date: 2002-06-02
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Factor Price Equalization in the UK? (2003)
Working Paper: Factor Price Equalization in the UK? (2002)
Working Paper: Factor Price Equalization in the UK? (2002)
Working Paper: Factor price equalization in the UK? (2002)
Working Paper: Factor Price Equalization in the UK? (2002)
Working Paper: Factor Price Equalization in the UK? (2002)
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