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Possible Sources of Wage Divergence among Metropolitan Areas of the United States

Department of Urban Planning, UCLA School of Public Affairs, 5345 Public Policy Building, Los Angeles, CA 90095-1656, USA, mattd{at}ucla.edu, Department of City and Regional Planning, Cornell University

Much of the literature on sub-national income convergence relates to states and regions. This paper focuses upon metropolitan areas as the germane geographical units for studying income convergence. Evidence of metropolitan wage divergence, the opposite of convergence, is presented. A theoretical basis for wage divergence is found in endogenous growth models and in two-sector trade models. Cross-section regression equations are estimated in which the level and the growth of metropolitan wages are related to variables that the empirical evidence and the theory suggest may be important sources of wage divergence.

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