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Wage and Industry Effects in U.S. Regional Incomes, 1840 to 1987: A CES Wage Index Method

Published online by Cambridge University Press:  27 February 2004

STEPHEN C. COOKE
STEPHEN C. COOKE
Affiliation:
Associate Professor, Department of Agricultural Economics and Rural Sociology University of Idaho, Moscow, ID 83843. E-mail: [email protected].
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Extract

The Solow growth and the Heckscher-Ohlin trade models describe two competing processes through which regional incomes converge over time. Solow's model attributes rising productivity of labor to additional regional capital investments. Heckscher-Ohlin's trade model ascribes the relocation of high value industries to regions with low wage rates. On the other hand Paul Krugman expects incomes to diverge over time as regions with an initial advantage maintain it through ever increasing external economies of scale. The Solow and Heckscher-Ohlin models imply that incomes converge through the movement of high quality labor and capital and high value goods and services into low income regions respectively.

Type
NOTES AND DISCUSSION
Information
The Journal of Economic History , Volume 63 , Issue 4 , December 2003 , pp. 1131 - 1146
Copyright
© 2003 The Economic History Association

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