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Mind the Gaps: the Evolution of Regional Inequalities in the UK, 1982-1997

  • Gilles Duranton
  • V Monastiriotis

In this paper we apply earnings equations for UK regions over 1982-1997. We find strong evidence of rapid convergence across regions regarding the determinants of individual wages (ie regional fixed-effects, gender gaps and returns to education and experience). Data on average regional earnings, by contrast, point at a worsening of UK regional inequalities and a rise in the North-South gap. Education accounts for most of the discrepancy between aggregate divergence and disaggregated convergence. First, London gained because its workforce became relatively more educated over the period. Second, returns to education increased nation-wide, which favoured the most educated regions (ie London). Third, returns to education were initially lower in London but they (partially) caught up with the rest of the country. Had returns to education and their distribution across UK regions remained stable over the period, the UK North-South divide would have decreased.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0485.

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Date of creation: Dec 2000
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Handle: RePEc:cep:cepdps:dp0485
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Stephen Nickell & Patricia Jones & Glenda Quintini, 2002. "A Picture of Job Insecurity Facing British Men," Economic Journal, Royal Economic Society, vol. 112(476), pages 1-27, January.
  2. Simon Burgess & Helene Turon, 2000. "Unemployment dynamics, duration and equilibrium: evidence from Britain," LSE Research Online Documents on Economics 20162, London School of Economics and Political Science, LSE Library.
  3. Rodriguez-Pose, Andres, 1998. "Dynamics of Regional Growth in Europe: Social and Political Factors," OUP Catalogue, Oxford University Press, number 9780198233831, March.
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