Spatial Convergence of Real Wages in Russian Cities
This paper provides an empirical test of spatial wage convergence in Russian cities. Using geo-coded data covering 997 Russian cities and towns from 1996 to 2013, I show that real city wages (i) converge over time and (ii) are significantly affected by the initial levels of real wages in neighboring cities. I also find that cities of the Far North, where a special wage policy is implemented, were converging more slowly than the rest of the country. I find a significant negative impact of regional subsidies on real wages in cities outside the Far North, and that the effect of extractive industries on real wage has become weaker. These results are robust to the radius of spatial interaction, and my conclusions hold if remote settlements are not taken into account.