Trade, Location, and Wages in the United States

This paper estimates a spatial wage structure for the United States. I employ the market-access and supplier-access method of Redding and Venables (2004), where access is determined using interstate trade data. Economic geography models predict that state-level wages are correlated to this measure, owing to higher levels of demand and better availability of intermediate goods in easily accessible regions. After correcting for omitted-variable bias with exogenous (first nature) regressors and using the appropriate instruments, I find that the explanatory power of access-variables is weak in this dataset.Spatial wage structure, United States, Economic Geography