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The Annals of Regional Science

Erschienen in:

22.01.2022 | Original Paper

Spatial spillovers and the productivity-compensation gap in the United States

verfasst von: Shishir Shakya, Alicia Plemmons, Juan Tomas Sayago-Gomez

Erschienen in: The Annals of Regional Science | Ausgabe 3/2022

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Abstract

Rising inequality in the US, and resulting economic and wage stagnation, has been attributed to the growing productivity-compensation gap. Academics and policy makers have puzzled over the source of the gap since the 1970s. We hypothesize that the observed gap is misleading because productivity spillovers only partially translate into increased compensation. We analyze productivity spillovers with a spatial dimension, such that the industrial productivity of one state spills over to that of contiguous states. To do so, we employ a unique data set and spatial econometric techniques, including a spatial two-stage least squares instrumental variable approach and the spatially lagged X framework. The data set includes state-level industry panel data on employment, compensation, and gross industrial output for sixty-six industries within the forty-eight continental US states from 1998 to 2017. Once we account for productivity spillovers within industries, the gap between labor compensation and productivity narrows significantly.

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IO-Snap is a user-friendly graphical-user-interface software that uses input-output data from the US national Supply and the Use tables, available from the US Bureau of Economic Analysis and the US Bureau of Labor Statistics (BLS). This software produces regionalized input-output accounts and coefficients for state economies (Regional Research Institute 2020) based on the Jackson (1998) input-output regionalization method and the Jackson and Court (2015) cross-hauling regionalization method.

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\(\Delta {\rm lnComp}_{{{\rm st}}} = \alpha + \gamma \Delta {\rm lnProd}_{{{\rm st}}} + \theta {\mathbf{W}}\Delta {\rm lnProd}_{{{\rm st}}} + {\mathbf{X}}_{st} \Gamma + \mu_{s} + \nu_{t} + e_{st}.\)

\(\Delta {\rm lnComp}_{{{\rm st}}} = \alpha + \rho {\mathbf{W}}\Delta {\rm lnComp}_{{{\rm st}}} + \gamma \Delta {\rm lnProd}_{{{\rm st}}} + \theta {\mathbf{W}}\Delta {\rm lnProd}_{{{\rm st}}} + {\mathbf{X}}_{{{\rm st}}} \Gamma + \mu_{{\rm s}} + \nu_{{\rm t}} + e_{{{\rm st}}}.\)

\(\Delta {\rm lnComp}_{{{\rm st}}} = \alpha + \gamma \Delta {\rm lnProd}_{{{\rm st}}} + \theta {\mathbf{W}}\Delta {\rm lnProd}_{{{\rm st}}} + {\mathbf{X}}_{{{\rm st}}} \Gamma + \mu_{{\rm s}} + \nu_{{\rm t}} + e_{{{\rm st}}} ,{\text{where}},u_{{{\rm st}}} = \lambda {\mathbf{W}}u_{{{\rm st}}} + e_{{{\rm st}}}.\)

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Titel: Spatial spillovers and the productivity-compensation gap in the United States
verfasst von: Shishir Shakya
Alicia Plemmons
Juan Tomas Sayago-Gomez
Publikationsdatum: 22.01.2022
Verlag: Springer Berlin Heidelberg
Erschienen in: The Annals of Regional Science / Ausgabe 3/2022
Print ISSN: 0570-1864
Elektronische ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-021-01099-2

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