The Regional Economics Applications Laboratory (REAL) is a unit in the University of Illinois focusing on the development and use of analytical models for urban and region economic development

In this paper, the nominal wage equation of a Core-Periphery model of New Economic Geography is derived. In order to show empirical evidence of the resulting hypothesis, the nominal wage equation is estimated for the Spanish provinces in the year 2003. Our results illustrate that the market access variable is statistically significant and quantitatively important in the explanation of the spatial wage structure observed in Spain. Moreover, we show that there are at least three channels through which market access might be affecting Spanish wages: human capital, productive capital and the size of R&D activities.