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

By Gilles Duranton and Vassilis Monastiriotis

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

Topics: HC Economic History and Conditions, HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2000
OAI identifier: oai:eprints.lse.ac.uk:20135
Provided by: LSE Research Online

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