DP2404 Earnings, Unemployment, And Housing: Evidence From A Panel Of British Regions

Author(s): Gavin Cameron, John Muellbauer
Publication Date: March 2000
Keyword(s): Earnings, housing markets, Regions, Unemployment, Wage Curves
JEL(s): C33, E24, R23
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2404

This paper models regional earnings and unemployment in the ten regions of Great Britain between 1972 and 1995, paying particular attention to their interaction and to the important influence of the housing market. In contrast to Blanchard and Katz (1992, 1997) for the United States, we find less persistence in British regional earning differentials but greater persistence in regional unemployment rates. We find no evidence of a negative effect of the overall unemployment rate on the earnings of men in non-manual, or women in full-time, employment and find a positive effect for women in part-time employment. However, for manual men, we find a significant elasticity of around -0.07, comparable with Blanchflower and Oswald (1994).