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CEP discussion paper
Spatial Determinants of Productivity: Analysis for the Regions of Great Britain
Patricia Rice and Anthony J. Venables
July 2004
Paper No' CEPDP0642:
Full Paper (pdf)

JEL Classification: R1; O4

Tags: regional disparities; productivity; clustering

This paper uses NUTS3 sub-regional data for Great Britain to analyse the determinants of spatial variations in income and productivity. We decompose the spatial variation of earnings into a productivity effect and an occupational composition effect. For the former (but not the latter) we find a robust relationship with proximity to economic mass, suggesting that doubling the population of working age proximate to an area is associated with a 3.5% increase in productivity in the area. We measure proximity by travel time, and show that effects decline steeply with time, ceasing to be important beyond approximately 80 minutes.