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Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019

Author

Listed:
  • Luis Bauluz

    (WIL - World Inequality Lab, CUNEF Universidad)

  • Paweł Bukowski

    (UCL - University College London [UCL], PAN - Polska Akademia Nauk = Polish Academy of Sciences = Académie polonaise des sciences)

  • Mark Fransham

    (University of Oxford, LSE - London School of Economics and Political Science)

  • Annie Lee

    (University Mc Gill)

  • Margarita López Forero

    (Université Paris-Saclay, UEVE - Université d'Évry-Val-d'Essonne)

  • Filip Novokmet

    (Universität Bonn = University of Bonn, WIL - World Inequality Lab)

  • Sébastien Breau

    (University Mc Gill)

  • Neil Lee

    (LSE - London School of Economics and Political Science)

  • Clément Malgouyres

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Moritz Schularick

    (Kiel institute, Institut d'Études Politiques [IEP] - Paris)

  • Verdugo Gregory

    (Université Paris-Saclay, UEVE - Université d'Évry-Val-d'Essonne)

Abstract

The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create crosscountry comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase. Whilst common global social, economic and technological shocks are important drivers of spatial inequality, this variation in levels and trends of spatial inequality opens the way to comparative research exploring the role of national institutions in mediating how global shocks translate into economic disparities between places.

Suggested Citation

  • Luis Bauluz & Paweł Bukowski & Mark Fransham & Annie Lee & Margarita López Forero & Filip Novokmet & Sébastien Breau & Neil Lee & Clément Malgouyres & Moritz Schularick & Verdugo Gregory, 2023. "Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019," Working Papers halshs-04423262, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04423262
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04423262v1
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    1. is not listed on IDEAS
    2. Demetrio Guzzardi & Salvatore Morelli, 2024. "A New Geography of Inequality: Top incomes in Italian Regions and Inner Areas," World Inequality Lab Working Papers halshs-04753481, HAL.
    3. Danilo Carullo & Paolo Di Caro & Ugo Fratesi, 2025. "The role of employment, labour productivity and trade linkages in the evolution of European regional disparities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(1), pages 1-30, March.
    4. Hong, Guangbin, 2024. "Two-sided sorting of workers and firms: Implications for spatial inequality and welfare," CLEF Working Paper Series 71, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    5. Harald Bathelt & Maximilian Buchholz & Michael Storper, 2024. "The nature, causes, and consequences of inter-regional inequality," Journal of Economic Geography, Oxford University Press, vol. 24(3), pages 353-374.
    6. Bathelt, Harald & Buchholz, Maximilian & Storper, Michael, 2024. "The nature, causes, and consequences of inter-regional inequality," LSE Research Online Documents on Economics 123014, London School of Economics and Political Science, LSE Library.
    7. Lee, Neil & Fransham, Mark & Bukowski, Pawel, 2024. "Spatial labour market inequality and social protection in the UK," LSE Research Online Documents on Economics 122224, London School of Economics and Political Science, LSE Library.

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    Keywords

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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