Regional wages and subjective measures of employment opportunities

We utilise a rich set of regional labour market variables to explain regional variation in Norwegian manufacturing wages. In particular, regional indicators of labour market conditions are computed from survey data in which respondents are asked to evaluate local employment opportunities. We find that average reported satisfaction with local job prospects and other survey-based indicators perform better in regional wage equations than traditional labour market variables, including the regional unemployment rate. Our results suggest that subjective measures of employment opportunities provide useful information about wage pressure.