Patricia E. Beeson

Identifying productivity and amenity effects in interurban wage differentials

This study focuses on the relative importance of amenity and productivity differences in determining wage differentials across urban areas. The approach developed takes advantage of the connection between land and labor market clearing conditions required for locational equilibrium of households and firms. Data on recent movers are used to estimate equilibrium wages and rents for a sample of metropolitan areas. This information is then used to identify amenity and productivity components of wages for each city in the sample. Using national estimates of the relative share of land in consumption and production, differences in productivity and amenities are found to be roughly equal sources of wage variation across the sample.

Population growth in U.S. counties, 1840-1990

Abstract We examine the location and growth of the U.S. population using county-level census data from 1840 and 1990. Natural characteristics (e.g., access to water transportation) heavily influenced where populations located in 1840, and produced characteristics in existence in 1840 (e.g., educational infrastructure) had a significant influence on subsequent growth. Evidence of population convergence appears only when the most-heavily-populated counties in 1840 are excluded from the sample. Moreover, when counties located on the western frontier are excluded from the full sample, on the assumption that they were relatively far from their steady-state populations, there is evidence of population divergence.

Amenities and regional differences in returns to worker characteristics

Average wages in regions in the United States vary considerably. In trying to explain these differences in the average wage across regions a number of studies have found that differences in the returns to characteristics of workers, such as years of schooling, are as important as differences in the skill composition of the labor force [4, 6, 10, 141. These differences in returns are generally interpreted as reflecting regional differences in demand for worker characteristics coupled with barriers to factor mobility. This interpretation is based on the argument that “the presence of at least one perfectly mobile factor, with perfect information will cause spatial convergence in characteristic prices, as that particular factor exploits any spatial price differential” [4, p. 2161. This paper suggests an alternative to this demand-based explanation for regional differences in the structure of wages, one based on regional differences in the supply of worker characteristics.’ This explanation does not rely on impediments to the movement of workers or firms and is consistent with an equilibrium view of wages in which regional wage differentials are viewed as compensation for local amenities. The theoretical model, presented in the following section, assumes capital and labor are perfectly mobile, with perfect information implying that in equilibrium the utility of workers with similar characteristics is the same in all locations. This convergence of utility, however, does not necessarily imply convergence of characteristic prices. Equilibrium differences in the returns to a specific worker characteristic can exist if worker characteristics affect an individual’s valuation of an area’s amenities relative to the individual’s demand for land.

Industrial Change and Wage Inequality: Evidence from the Steel Industry

The empirical analysis in this paper, which draws on Current Population Survey data, indicates that structural decline in the steel industry during the 1980s markedly affected the distribution of wages both in the industry and in steel-producing communities. The steelworker wage distribution experienced both a drop in the mean and an increase in the variance, becoming very similar to the distribution of wages in other durable goods manufacturing industries. Declines in steel employment substantially increased wage inequality in steel-producing communities, even among workers not employed in steel.

Local Fiscal Policies and Urban Wage Structures

It has long been recognized that average wages vary strikingly across regions and urban areas in part due to differences in local amenities and fiscal policies. However, analogous differences in wage dispersion remain relatively unexplored. The authors develop a model suggesting that, after accounting for individual characteristics, wage dispersion across income groups should reflect differences in the relative valuation of local amenities and fiscal policies. The authors empirically investigate whether there is a link between local taxes and expenditures and the degree of dispersion in the wage structure and find evidence that such a relationship exists.

Spatial Aspects of Capacity Change by U.S. Integrated Steel Producers

This paper examines changes in the location of ore-based steel-making capacity in the U.S. over the period 1974 to 1991 using data on each of the 45 ore-based mills that were in operation in 1974. We find that the geographic distributions of demand and of competition from minimills and imports were important in determining where capacity reductions occurred and which plants were closed. Technology in use at the plant also affected capacity adjustment. However, we find that regional variation in prices of raw materials were not important factors in determining where steel-making capacity was reduced.

Posted Rates and Mortgage Lending Activity

In many metropolitan areas (MSAs) newspapers post mortgage terms for lenders in a manner designed to permit an easy comparison of discount points and note rates. Using these advertised rates for 73 lenders in three MSAs we examine 1) how applicants respond to short-run changes in relative rates, and 2) the relationship between the services provided and quality of applications received by lenders and their long-term market positions. We find that applicant flows increase when lenders lower their rates. We also find that persistent cross-lender differences in rates are associated with differences in product quality reflected in processing times, loan sales, and FHA/VA lending; and that high-risk borrowers tend to apply to lenders posting above-average rates.