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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.

Suggested Citation

  • Steve Gibbons & Henry G. Overman & Panu Pelkonen, 2010. "Wage Disparities in Britain: People or Place?," SERC Discussion Papers 0060, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0060
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    References listed on IDEAS

    as
    1. Rice, Patricia & Venables, Anthony J. & Patacchini, Eleonora, 2006. "Spatial determinants of productivity: Analysis for the regions of Great Britain," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 727-752, November.
    2. Giordano Mion & Paolo Naticchioni, 2009. "The spatial sorting and matching of skills and firms," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 28-55, February.
    3. Karl Taylor, 2006. "UK Wage Inequality: An Industry and Regional Perspective," LABOUR, CEIS, vol. 20(1), pages 91-124, March.
    4. 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.
    5. Alberto Dalmazzo & Guido Blasio, 2007. "Social returns to education in Italian local labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, pages 51-69.
    6. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
    7. 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.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
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      by Tyler Cowen in Marginal Revolution on 2011-03-29 20:40:57

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    Cited by:

    1. Donald R. Davis & Jonathan I. Dingel, 2012. "A Spatial Knowledge Economy," NBER Working Papers 18188, National Bureau of Economic Research, Inc.
    2. Faggio, Giulia & Silva, Olmo, 2014. "Self-employment and entrepreneurship in urban and rural labour markets," Journal of Urban Economics, Elsevier, vol. 84(C), pages 67-85.
    3. Ahrend, Rudiger & Farchy, Emily & Kaplanis, Ioannis & Lembcke, Alexander C., 2015. "What makes cities more productive? Agglomeration economies and the role of urban governance: evidence from 5 OECD countries," LSE Research Online Documents on Economics 64619, London School of Economics and Political Science, LSE Library.
    4. Kemeny, Thomas, 2013. "Immigrant diversity and economic development in cities: a critical review," LSE Research Online Documents on Economics 58458, London School of Economics and Political Science, LSE Library.
    5. Faggio, Giulia & Silva, Olmo, 2012. "Does self-employment measure entrepreneurship? evidence from Great Britain," LSE Research Online Documents on Economics 57919, London School of Economics and Political Science, LSE Library.
    6. D'Costa, Sabine & Overman, Henry G., 2014. "The urban wage growth premium: Sorting or learning?," Regional Science and Urban Economics, Elsevier, pages 168-179.
    7. Gaure, Simen, 2013. "OLS with multiple high dimensional category variables," Computational Statistics & Data Analysis, Elsevier, pages 8-18.
    8. 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, vol. 41(1), pages 57-74, January.
    9. ., 2014. "Urban economic performance," Chapters,in: Urban Economics and Urban Policy, chapter 2, pages 11-53 Edward Elgar Publishing.
    10. Chlaß, Nadine & Riener, Gerhard, 2015. "Lying, spying, sabotaging : procedures and consequences," Working Papers 15-18, University of Mannheim, Department of Economics.
    11. Gibbons, Steve & Overman, Henry G., 2011. "The future of rural policy: lessons from spatial economics (Policy Note)," LSE Research Online Documents on Economics 59233, London School of Economics and Political Science, LSE Library.
    12. Steve Gibbons & Henry G. Overman, 2011. "The Future of Rural Policy: Lessons from Spatial Economics," SERC Policy Papers 008, Spatial Economics Research Centre, LSE.
    13. 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.

    More about this item

    Keywords

    wage; disparities; labour;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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