The causes of earnings inequality within regions in Great Britain : 1975 to 1995
The recent convergence in average earnings in the regions of Great Britain is in contrast to the increasing inequality in the overall structure of earnings. This thesis investigates the degree of earnings inequality in the regions of Great Britain over the period 1975 to 1995. The analysis employs the New Earnings Survey and the British Household Panel Survey datasets to decompose national earnings inequality into between-group and within-group inequality, both cross-sectionally ad over time, and finds that it is the increasing inequality within regions that is the primary source of increasing inequality in the national distribution of earnings. A decomposition of the Gini coefficient is also adopted to illustrate how regional convergence of the Gini coefficient is also adopted to illustrate how regional convergence in average earnings has been accompanied by increasing overall earnings inequality in Great Britain. The New Earnings Survey data is further used to model the determinants of regional earnings. Cross-section earnings equations are estimated to identify those factors that influence the determination of earnings within regions, and how these factors have contributed to the increase in overall earnings inequality over the twenty-year period. Quantile regression analysis is employed to show whether the effects of the determinants of regional earnings are the same across the regional earnings distributions, and national OLS and quantile regressions are estimated in order to test potential explanations for the rise in national earnings inequality. Using the panel nature of the NES a fixed-effects specification is also used to estimate regional earnings equations, where such a specification allows for the control of individual-specific heterogeneity.