Abstract ：
This study investigates the wage affects adjacent areas each other. We estimate the panel model including spatial elements such as adjacent effect, reciprocal of distance, and GDP. We predict the effect of innovation giving wage increase in a certain region by the impulse response as its application. It will be decided depending on the economic scale of the region how the wage rise in the region affects other regions.
The important finding of our analysis is that the wage in population concentration area does not spread to other local areas although the wage in the local area spread to other areas. As a result, the effects of region-specific wage shock on aggregate wage level is larger in local areas than in population concentration area.