Regional Earnings Inequality in Great Britain: Evidence from Fixed-Effects Regressions
Posted: 21 Feb 2008
Date Written: November 2004
Earnings inequality in Great Britain has increased substantially over the last two decades at both the national and regional levels. This paper examines the determinants of regional hourly earnings over the period 1976 to 1995 by estimating regional fixed-effects earnings equations. Using panel dataset from the New Earnings Survey, individual-specific heterogeneity is controlled for, and superior estimates of the factors affecting regional earnings are obtained. Increasing returns to skill, increasing industrial differentials, and increasing premiums for older workers are found to have contributed to increasing regional earnings inequality, and consequently rising earnings inequality at the national level.
Keywords: Increasing regional earnings inequality, Fixed-effects earnings equations
JEL Classification: J31, R23
Suggested Citation: Suggested Citation