MANUFACTURING WAGES IN THE ENLARGED EU: THE ROLE OF NEIGHBOUR‐COUNTRY EFFECTS*
In: The Manchester School, Volume 77, Issue 1, p. 65-81
ISSN: 1467-9957
In this paper a New Economic Geography type wage equation is estimated for the EU‐25. The determinants of manufacturing wages are shown to be sector‐specific and the role of geography is limited. As a consequence, we show that the improvement of the EU's internal market and the evolution of European geography are likely to favour larger EU members and challenge smaller ones.