We provide sufficient statistics for nominal and real wage exposure to productivity shocks in a constant elasticity economic geography model. These exposure measures summarize the first-order general equilibrium elasticity of nominal and real wages in each location with respect to productivity shocks in all locations. They are readily computed using commonly available trade data and the values of trade and migration elasticities. They have an intuitive interpretation in terms of underlying economic mechanisms. Computing these measures for all bilateral pairs of locations involves a single matrix inversion and therefore remains computational efficient even with an extremely high-dimensional state space.

---

1 May 2024

---

AEA Papers and Proceedings 114, pp.328-333, 2024

---

DOI: 10.1257/pandp.20241043

https://www.aeaweb.org/articles?id=10.1257/pandp.20241043

This Journal article is published under the centre's Trade programme, Urban programme.