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Economic Commentary

Labor Cost Differentials: Causes and Consequences

Labor costs are often cited as the primary hindrance to economic development in cities where wages are high and as a spur to development in cities where wages are low. The relationship between labor costs and growth is complex, however. Many high-wage cities do experience a decline in growth, but others do not. Similarly, many low-wage cities grow rapidly, but some do not.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Eberts, Randall, and Joe Stone. 1986. “Labor Cost Differentials: Causes and Consequences.” Federal Reserve Bank of Cleveland, Economic Commentary 12/1/1986.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International