Inter-regional wage differentials in Spain

Abstract

The paper analyses the wage differentials among different Spanish regions. Hedonic wage equations are first formulated for those regions and then the wage decomposition method is applied, which allows separation of the effects due to characteristics from those due to returns. The results show that in the Centre and South, half of the wage differential corresponds to each concept, whereas in the North and East the difference is due more to the different remuneration than to the different characteristics. The variables that exert greatest influence on the characteristic differences are seniority, possessing a university degree, the command of a second language, the sector of activity, the supervisory tasks undertaken and the occupation. With respect to the different returns, the largest differences correspond to remuneration for seniority, a second language, the sector of activity, the working hours and discrimination by gender.