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Area disparities in Britain: understanding the contribution of people vs. place through variance decompositions

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posted on 2023-06-09, 00:31 authored by Stephen Gibbons, Henry G Overman, Panu PelkonenPanu Pelkonen
This article considers methods for decomposing wage variation into individual and group specific components. We discuss the merits of these methods, which are applicable to variance decomposition problems generally. The relative magnitudes of the measures depend on the underlying variances and covariances, and we discuss how to interpret them, and how they might relate to structural parameters of interest. We show that a clear-cut division of variation into area and individual components is impossible. An empirical application to the British labour market demonstrates that labour market area effects contribute very little to the overall variation of wages in Britain.

History

Publication status

  • Published

File Version

  • Published version

Journal

Oxford Bulletin of Economics and Statistics

ISSN

0305-9049

Publisher

Wiley

Issue

5

Volume

76

Page range

745-763

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2016-03-10

First Open Access (FOA) Date

2016-03-10

First Compliant Deposit (FCD) Date

2016-03-10

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