This paper investigates the determinants of regional wages in Britain using annual data from the New Earnings Survey over the period 1974-1989. Separate wage equations are estimated for male and female workers, for manuals and non-manuals and for manufacturing industry as against non-manufacturing. The main conclusions are that local labour market conditions (as measured by the regional unemployment rate) have a significant impact on wages only in the case of manual men. Differences in the wage rates of non-manual men and women across regions appear to have more to do with differences in the cost-of-living (and especially house prices) suggesting that the labour market for these groups is national rather than local in character.

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Richard Jackman and S Savouri

September 1995     Paper Number CEPDP0262