Spatial Structure of Wage: A Test of Krugman Model for Iranian Provinces

Saeed Rasekhi^1, and Marzieh Dindar Rostami¹

¹Department of Economics, University of Mazandaran, Babolsar, Iran

Cite this paper:
Saeed Rasekhi and Marzieh Dindar Rostami. Spatial Structure of Wage: A Test of Krugman Model for Iranian Provinces. American Journal of Modeling and Optimization. 2013; 1(3):56-60. doi: 10.12691/ajmo-1-3-6

Abstract

The purpose of this paper is to investigate the industrial wage inequalities based on Krugman model. For this, we’ve employed a panel method for 30 Iranian provinces during time period 2003-2007. The estimation results suggest that the new economic geography provides a good description of the spatial structure of wages in the provinces of Iran. Our findings indicate that market size and distance-weighted will have positive relationship with wages. The overall result of this study corroborates the notion of centralization in the Iranian economy. The large wage variations explained by economic geography could cause significant internal migration.

Keywords:
new economic geography spatial structure of wage centralization size of market transport costs

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