The Changing Nature of Regional Wage Differentials From 1975 to 1983

Introduction Over the past 30 years, a great deal of research has been done on regional wage differentials. The subject has received considerable attention for a variety of reasons, notably because of its implications for understanding the degree to which competitive market forces lead to the equilibration of returns to labor, and also because of the possible effects of labor cost differentials on regional economic growth. For the most part, the work on regional wage differentials has had three goals: (1) to estimate the size of regional wage differentials at a particular date or over time, (2) to identify their sources, and (3) to provide a theoretical explanation for their existence. Estimates of regional wage differentials vary considerably as a result of variations in data sources, in measures of regional wage differentials, in measures of payments to workers, in geographic divisions, in time periods considered, and in methodologies used. Despite these inconsistencies across studies, most of the empirical work done confirms the view that, while some intermittent convergence has occurred over time, money wages in the northern United States have tended to be significantly greater than those in the South, at least since the beginning of this century.'