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SERC/Urban and Spatial Programme Discussion Paper
Wage Disparities in Britain: People or Place?
Steve Gibbons, Henry G. Overman and Panu Pelkonen
October 2010
Paper No' SERCDP0060:
Full Paper (pdf)

JEL Classification: R11; J31

Tags: wage; disparities; labour

This paper investigates wage disparities across sub-national labour markets in Britain using a newly available microdata set. The findings show that wage disparity across areas is very persistent over time. While area effects play a role in this wage disparity, most of it is due to individual characteristics (sorting). Area effects contribute a very small percentage to the overall variation of wages and so are not very important for understanding overall levels of wage disparity. Specifically, in our preferred specification area effects explain less than 1% of overall wage variation. This share has remained roughly constant over the period 1998- 2008.

This paper has been published as:
Area Disparities in Britain: Understanding the Contribution of People vs. Place Through Variance Decompositions, Stephen Gibbons, Henry G. Overman and Panu Pelkonen, Oxford Bulletin of Economics and Statistics, Early view, July 2014