Spatial Determinants of Productivity: Analysis for the Regions of Great Britain
Paper No' CEPDP0642:
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Keywords: regional disparities; productivity, clustering
JEL Classification: R1; O4
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This Paper is published under the following series:
CEP Discussion Papers
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This paper uses NUTS3 sub-regional data for Great Britain to analyse the determinants of spatial
variations in income and productivity. We decompose the spatial variation of earnings into a
productivity effect and an occupational composition effect. For the former (but not the latter) we
find a robust relationship with proximity to economic mass, suggesting that doubling the
population of working age proximate to an area is associated with a 3.5% increase in productivity
in the area. We measure proximity by travel time, and show that effects decline steeply with time,
ceasing to be important beyond approximately 80 minutes.