No abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

No abstract

No abstract

It has often been noted that the economic structure and performance of the regions will have important implications for the execution of efficient macroeconomic inflation and unemployment policies in Britain. The object of this paper is to use time-series and cross-section data to analyse the determinants of differences in regional earnings.The existence of these regional wage and unemployment differentials for employees with similar productive characteristics questions the relevance of competitive labour market theory which would predict their disappearance through actual or potential migration of labour and capital. This competitive equilibrium theory is, however, compatible with the existence of regional wage differentials which may arise from regional costof-living differences, non-pecuniary factors, the industry mix, nonhomogeneity of labour and market failures which rationalize the lack of regional mobility and non-instantaneous labour market adjustment. The neoclassical model suggests, nevertheless, that regional wage differentials which are not a result of the above should disappear. Moore and Rhodes (1981) suggest that a reduction in regional earnings differentials did occur in the 1960s and 1970s. Fig. 1 illustrates the underlying patterns in regional differentials which exist in the unemployment rate and in the earnings of manual workers over our sample period 196 1-1984. The broad pattern cf convergence is more dramatic in the unemployment than in the earnings seies, for which the majority of convergence took place from 1971 to 1974.A number of reasons, other than competitive pressure, have been put forward to explain this convergence. These include the growth and regional diversification of public sector employment, the existence of wage councils, regional policies which include regional subsidies and increases in 'Manuscript received 27.11.85; final version received 10.6.86. +We are grateful to R. Bladen-Hovell. E. T. Nevin, J. I. Round, the Editorandtwoanonymous referees for helpful comments on a previous draft of this paper. Naturally all remaining errors are our own. Material from the Generul HouseholdSurvey, made available through the Office of Population Censuses and Surveys and the ESRC Data Archive, has been used by permission of the Controller of H.M. Stationery Office. with the usual disclaimer.158