A Methodology for Estimating Returns to Skills for Canadian Provinces and U.S. States

Differences in both regional skill prices and skill mix can explain interregional variations in the wage distributions. We control for interreginal differences in skill mix that permit us to compute key pararmeters of regional wage distributions including regional returns to skills. In additional to setting forth the methods in detail, we also present estimates for 48 U.S. states and 10 Canadian provinces. For both males and females, we find that regional mean wages (with controls for skills mix) in the U.S. and Canada are similar, but that the returns to skills are systematically higher in the U.S