The North-South Divide: Questions of Existence and Stability?

This paper investigates the relationship between regional earnings and unemployment by use of information primarily from the General Household Surveys of 1975 and 1982. Conventional earnings functions are augmented to capture the effects of the level and duration of unemployment and of regional differences in living costs. In common with previous studies, the authors find personal characteristics and the occupation or industry of employment to be important in earnings determination. In this paper, however, they generally find that, although higher unemployment is associated with reduced regional earnings ceteris paribus, long-term unemployment has little influence in regional earnings determination. Copyright 1990 by Royal Economic Society.