Working Paper: CEPR ID: DP2404
Authors: Gavin Cameron; John Muellbauer
Abstract: 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).
Keywords: earnings; unemployment; housing markets; wage curves; regions
JEL Codes: C33; E24; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lagged earnings (J31) | unemployment (J64) |
| log unemployment (J64) | log earnings (full-time men) (J39) |
| regional unemployment (R11) | women's earnings (full-time) (J31) |
| regional unemployment (R11) | women's earnings (part-time) (J31) |
| relative house prices (R31) | men's earnings (full-time) (J31) |
| relative house prices (R31) | women's earnings (full-time) (J31) |