February 2005

IZA DP No. 1501: Accounting for Differences in Labour Market Outcomes in Great Britain: A Regional Analysis Using the Labour Force Survey

Regional unemployment rates in Great Britain have narrowed dramatically in recent years. However, significant differences still remain in terms of both employment and economic inactivity rates, which may now better reflect relative labour market performance. This paper examines these differences in labour market outcomes using a unified empirical framework that decomposes regional differences in employment, economic inactivity and unemployment into components due to either structural or composition effects. The analysis highlights the important role that ill health and structural deficits currently play in accounting for regional differences in both employment and economic inactivity rates.