In this paper we apply earnings equations for U.K. regions over 1982-1997. We find evidence of rapid convergence across regions regarding the determinants of individual wages (i.e., regional fixed-effects, gender gaps, and returns to education and experience). In contrast, data on average regional earnings point to a worsening of U.K. regional inequalities and a rise in the North-South gap. Education accounts for most of the discrepancy between aggregate divergence and disaggregated convergence. First, London gained because its workforce became relatively more educated over the period. Second, returns to education increased nationwide, which favored the most educated regions (i.e., London). Third, returns to education were initially lower in London but they (partially) caught up with the rest of the country. Had returns to education and their distribution across U.K. regions remained stable over the period, the U.K. North-South divide would have decreased. Copyright 2002 Blackwell Publishers Inc.

Assumptions about the role of neighbourhood effects are increasingly built into urban policies, particularly in relation to the role of spatial concentrations of disadvantage in perpetuating inequality and social exclusion. Nevertheless, hard evidence to underpin this assumption is still largely lacking. To help fill this gap, this paper focuses on the relationship between overall urban scale and the spatial scale of segregation, and on the implications of wider segregation for social outcomes at the individual level. Education is taken as a test case, because of the role of defined catchment areas in relation to school recruitment. Results show that: at given scales, larger city-regions are much more segregated; educational outcomes are only partly affected by neighbourhood effects for particular population characteristics; and greater individual inequality in more segregated areas is mainly due to positive impacts of segregation for more advantaged groups, rather than negative impacts for the most disadvantaged.

(JEL El, Fg3, C33)

This paper examines the geographical impact of the recent austerity measures in Greece. Owing to compositional differences across regions, the horizontal measures are found to amplify existing disparities. It is argued that under certain conditions, relating to wider spatial imbalances in the country, this can trigger cumulative divergence processes that may be hard to address in the future. To correct this, it is proposed that revenue-generating efforts should concentrate more on tackling tax evasion and increasing tax progressivity; while the reduction in public consumption should be compensated by targeted increases in public investment. Facilitating the early release of already earmarked European Union funds can be central for such a strategy.

We examine the Greek public-private wage differential before the debt crisis to evaluate the prospective impact of the recent public sector pay cuts. We find a large public premium which persists after controlling for individual and job characteristics. For men, much of this is accounted for by self-selection into the sector that rewards better their characteristics, while for women it is largely driven by sectoral differences in returns. We attribute these effects to more egalitarian pay structures in the public sector and to demand problems in the private sector. The recent policy measures only partially change this situation, as wage deflation extends to the private sector, preserving public premia for the low paid.