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Mind the gaps: the evolution of regional inequalities in the UK, 1982-1997

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  • Duranton, Gilles
  • Monastiriotis, Vassilis

Abstract

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.

Suggested Citation

  • Duranton, Gilles & Monastiriotis, Vassilis, 2000. "Mind the gaps: the evolution of regional inequalities in the UK, 1982-1997," LSE Research Online Documents on Economics 20135, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20135
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    2. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    3. Peter Sunley & Ron Martin & Ben Gardiner & Andy Pike, 2020. "In search of the skilled city: Skills and the occupational evolution of British cities," Urban Studies, Urban Studies Journal Limited, vol. 57(1), pages 109-133, January.
    4. Laurent Gobillon & Carine Milcent, 2013. "Spatial disparities in hospital performance," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 1013-1040, November.
    5. Vieira, J.A.C. & Couto, J.P.A. & Tiago, M.T.B., 2006. "Inter-regional Wage Dispersion in Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(1).
    6. Laurent Gobillon & Carine Milcent, 2008. "Regional disparities in mortality by heart attack: evidence from France," PSE Working Papers halshs-00586837, HAL.
    7. Mion, Giordano, 2004. "Spatial externalities and empirical analysis: the case of Italy," Journal of Urban Economics, Elsevier, vol. 56(1), pages 97-118, July.
    8. Lubomira Anastassova, 2006. "Productivity Differences and Agglomeration Across Districts of Great Britain," CERGE-EI Working Papers wp289, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Rice, P., 2002. "The great divide: regional differences in education and training," Discussion Paper Series In Economics And Econometrics 0201, Economics Division, School of Social Sciences, University of Southampton.

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    Keywords

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    JEL classification:

    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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