| Summary: | ABSTRACTThis research aims to know key determinants on regional nominal of wages large and medium manufacturing industries throughout Sumatra island over periods of 1979 and 1999 using dynamic model analysis. Factor that affects the regional nominal of wages are transport cost (X1), value added (X2), size firm (X3), dummy industry (Dind), and dummy trade policy.The results found regional nominal of wages are influenced by value added (X2), size firm (X3), location industries, and trade policy. However concentration industrial region (agglomeration) as proxy X1, does not influence regional nominal of wages.This study also identifies industrial specialization at Sumatra island using Specialization index. The findings indicate specialized industries at Sumatra island concentrated geographically in and around Medan City particularly sectors,( paper, chemistry, and basic metal ), and Batam City especially
electronic industries.
Keywords : Regional Wages -- Agglomeration -- Industry location -- Specialization Index
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