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Wage Disparities in Britain: People or Place?

  • Steve Gibbons
  • Henry G. Overman
  • Panu Pelkonen

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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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0060.pdf
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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
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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  1. Rice, Patricia & Venables, Anthony J, 2004. "Spatial Determinants of Productivity: Analysis for the Regions of Great Britain," CEPR Discussion Papers 4527, C.E.P.R. Discussion Papers.
  2. Karl Taylor, 2006. "UK Wage Inequality: An Industry and Regional Perspective," LABOUR, CEIS, vol. 20(1), pages 91-124, 03.
  3. Alberto Dalmazzo & Guido Blasio, 2007. "Social returns to education in Italian local labor markets," The Annals of Regional Science, Springer, vol. 41(1), pages 51-69, March.
  4. MION, Giordano & NATICCHIONI, Paolo, 2006. "The spatial sorting and matching of skills and firms," CORE Discussion Papers 2006099, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  6. 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, vol. 42(2), pages 219-256.
  7. Heather Dickey, 2007. "Regional Earnings Inequality In Great Britain: Evidence From Quantile Regressions," Journal of Regional Science, Wiley Blackwell, vol. 47(4), pages 775-806.
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