|dc.description.abstract||Using a new multilateral transitive price index, this dissertation examines
three topics in regional and labor economics. Building on a disaggregated index
developed by Kokoski, Cardiff, and Moulton, the research makes the index
workable by aggregating it to an all-items level and expanding it through time for
forty-three Metropolitan Statistical Areas and region-population size categories.
This price index is used to examine whether real wage differentials exist, the
implicit price of amenities, and the returns to interregional migration.
Real wage differentials among regions are found to persist after prices are
carefully considered through the use of the index developed in this dissertation.
There is no narrowing of the real wage distribution overall, or between areas,
compared to the nominal wage distribution. Although the magnitudes of the
differentials are very similar, the pattern of wage differentials changes
dramatically once prices are considered. Real wage differentials exist, but in a
completely different manner than nominal wage differentials. The degree to
which individual compensation reflects the value of regional amenities is the
second topic of study. Using a single-equation methodology, the nonlinearities in
the relationship between amenities and real wages are explored, as is the effect of
controlling for prices as a dependent variables and the effect of not controlling for
prices at all. The results are different in magnitude than those in almost all
previous studies. In the third research area, a two-regime model that corrects for
selectivity bias is estimated for both real and nominal wages in 1991. Individuals
who migrated in any of the previous thirteen years were found to earn more than
their non-migrant counterparts, but the act of migrating hurt their wages compared
to predicted counterfactual wages in the non-migrant regime.
In all cases studied, the inclusion of a multilateral transitive price index
altered the magnitude, and often the direction, of the results. Because prices are
controlled for in a precise manner, the results can be examined in light of the
working of regional labor markets with less concern that the results are driven by
differences in regional prices.||