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Wage Disparities in Britain: People or Place?

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  • Steve Gibbons
  • Henry G. Overman
  • Panu Pelkonen

Abstract

This paper investigates wage disparities across sub-national labour markets in Britain using a newly available microdata set. The findings show that wage disparity across areas is very persistent over time. While area effects play a role in this wage disparity, most of it is due to individual characteristics (sorting). Area effects contribute a very small percentage to the overall variation of wages and so are not very important for understanding overall levels of wage disparity. Specifically, in our preferred specification area effects explain less than 1% of overall wage variation. This share has remained roughly constant over the period 1998- 2008.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0060.

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Date of creation: Oct 2010
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Handle: RePEc:cep:sercdp:0060

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: wage; disparities; labour;

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  1. Giordano Mion & Paolo Naticchioni, 2009. "The spatial sorting and matching of skills and firms," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 42670, London School of Economics and Political Science, LSE Library.
  2. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 42(2), pages 219-256.
  3. Patricia Rice & Anthony J. Venables, 2004. "Spatial Determinants of Productivity: Analysis for the Regions of Great Britain," CEP Discussion Papers dp0642, Centre for Economic Performance, LSE.
  4. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  5. Heather Dickey, 2007. "Regional Earnings Inequality In Great Britain: Evidence From Quantile Regressions," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 47(4), pages 775-806.
  6. Alberto Dalmazzo & Guido Blasio, 2007. "Social returns to education in Italian local labor markets," The Annals of Regional Science, Springer, Springer, vol. 41(1), pages 51-69, March.
  7. Karl Taylor, 2006. "UK Wage Inequality: An Industry and Regional Perspective," LABOUR, CEIS, CEIS, vol. 20(1), pages 91-124, 03.
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    by Tyler Cowen in Marginal Revolution on 2011-03-29 15:40:57
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Cited by:
  1. Gaure, Simen, 2013. "OLS with multiple high dimensional category variables," Computational Statistics & Data Analysis, Elsevier, Elsevier, vol. 66(C), pages 8-18.
  2. Sabine D'Costa & Henry G. Overman, 2013. "The Urban Wage Growth Premium: Sorting or Learning?," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0135, Spatial Economics Research Centre, LSE.
  3. David Heres & Darby Jack & Deborah Salon, 2014. "Do public transport investments promote urban economic development? Evidence from bus rapid transit in Bogotá, Colombia," Transportation, Springer, Springer, vol. 41(1), pages 57-74, January.
  4. Donald R. Davis & Jonathan I. Dingel, 2012. "A Spatial Knowledge Economy," NBER Working Papers 18188, National Bureau of Economic Research, Inc.
  5. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0149, Spatial Economics Research Centre, LSE.
  6. Steve Gibbons & Henry G. Overman, 2011. "The Future of Rural Policy: Lessons from Spatial Economics," SERC Policy Papers 008, Spatial Economics Research Centre, LSE.
  7. Giulia Faggio & Olmo Silva, 2012. "Does Self-Employment Measure Entrepreneurship? Evidence from Great Britain," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0109, Spatial Economics Research Centre, LSE.
  8. Stefan Groot & Henri de Groot, 2011. "Wage inequality in the Netherlands: Evidence, trends and explanations," CPB Discussion Paper 186, CPB Netherlands Bureau for Economic Policy Analysis.

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