We empirically test the positive relationship between market access and wages stated by New Economic Geography. Contrary to most estimation in other countries, we find evidence of significant spatial heterogeneity of this elasticity across Chilean communities.

The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in developed countries, but it has not been evaluated for developingcountries where the excessive spatial concentration seems to be related with negative consequences on the economic development. This...