5. There is substantial inequality of wage levels between regions within the United States. For example, wages

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5. There is substantial inequality of wage levels between regions within the United States. For example, wages of manufacturing workers in equivalent jobs are about 20 percent lower in the Southeast than they are in the Far West. Which of the explanations of failure of factor price equalization might account for this? How is this case different from the divergence of wages between the United States and Mexico (which is geographically closer to both the U.S. Southeast and the Far West than the Southeast and Far West are to each other)?

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International Economics Theory And Policy

ISBN: 9780321116399

6th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz

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