Compensating Differences and Interregional Wage Differentials

Microdata from the 1976 Panel Study in Income Dynamics are used as evidence concerning the nature of interregional wage differentials in the US. The results indicate that a full-time worker's real wages or earnings do not differ between broadly defined geographic areas of the US. Interregional differences in real wages were found to be based on different relative endowments of various heterogeneous labor types. These findings, however, conflict with those of previous studies. Comparisons are made with the approaches taken by other investigators.