Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers
The large and persistent wage gap between the Bangkok Metropolitan Region and its peripheries remains a major concern for policymakers and civil society. Theoretically, these regional disparities exist due to differences in workforce skills and the local characteristics of the regions. This study em...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-12-01
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| Series: | Economies |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-7099/10/12/319 |
| _version_ | 1827640718144831488 |
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| author | Nutchapon Prasertsoong Nattapong Puttanapong |
| author_facet | Nutchapon Prasertsoong Nattapong Puttanapong |
| author_sort | Nutchapon Prasertsoong |
| collection | DOAJ |
| description | The large and persistent wage gap between the Bangkok Metropolitan Region and its peripheries remains a major concern for policymakers and civil society. Theoretically, these regional disparities exist due to differences in workforce skills and the local characteristics of the regions. This study empirically investigates the sources of spatial wage disparity in Thailand using data sets from the Labor Force Survey, the Industrial Census, geospatial data, and satellite imagery for the years 2007, 2012, and 2017. The two-stage estimation method was applied, and the soil clay content was used as the instrumental variable for correcting endogeneity and variable bias omission. The results show that workers’ education and experience affect the wage differential. Other than individual skills, workers also benefited from the agglomeration externalities of large cities. Specifically, the effect of agglomeration externalities on wages in Thailand was found to be statistically significant. To overcome the paradox of a low urbanization rate and high urban primacy in Thailand, this study suggests the establishment of multiple regional cities that create high agglomeration externalities. |
| first_indexed | 2024-03-09T17:03:34Z |
| format | Article |
| id | doaj.art-72412171acc94398829a663fcfe77b4e |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-09T17:03:34Z |
| publishDate | 2022-12-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-72412171acc94398829a663fcfe77b4e2023-11-24T14:26:47ZengMDPI AGEconomies2227-70992022-12-01101231910.3390/economies10120319Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing WorkersNutchapon Prasertsoong0Nattapong Puttanapong1Faculty of Economics, Thammasat University, Bangkok 10200, ThailandFaculty of Economics, Thammasat University, Bangkok 10200, ThailandThe large and persistent wage gap between the Bangkok Metropolitan Region and its peripheries remains a major concern for policymakers and civil society. Theoretically, these regional disparities exist due to differences in workforce skills and the local characteristics of the regions. This study empirically investigates the sources of spatial wage disparity in Thailand using data sets from the Labor Force Survey, the Industrial Census, geospatial data, and satellite imagery for the years 2007, 2012, and 2017. The two-stage estimation method was applied, and the soil clay content was used as the instrumental variable for correcting endogeneity and variable bias omission. The results show that workers’ education and experience affect the wage differential. Other than individual skills, workers also benefited from the agglomeration externalities of large cities. Specifically, the effect of agglomeration externalities on wages in Thailand was found to be statistically significant. To overcome the paradox of a low urbanization rate and high urban primacy in Thailand, this study suggests the establishment of multiple regional cities that create high agglomeration externalities.https://www.mdpi.com/2227-7099/10/12/319agglomeration economieswage disparitiesThailandproductivity spilloverurbanization |
| spellingShingle | Nutchapon Prasertsoong Nattapong Puttanapong Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers Economies agglomeration economies wage disparities Thailand productivity spillover urbanization |
| title | Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers |
| title_full | Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers |
| title_fullStr | Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers |
| title_full_unstemmed | Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers |
| title_short | Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers |
| title_sort | regional wage differences and agglomeration externalities micro evidence from thai manufacturing workers |
| topic | agglomeration economies wage disparities Thailand productivity spillover urbanization |
| url | https://www.mdpi.com/2227-7099/10/12/319 |
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