www.lancs.ac.ukstaffecajtspatial_20inequalities by yurtgc548

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									  SPATIAL INEQUALITIES IN ECONOMIC 
   PERFORMANCE: THE KEY ROLE OF 
           HUMAN CAPITAL

What do we mean by spatial inequalities in 
economic performance?

Why do spatial inequalities persist?

Why are spatial inequalities a problem?

What can be done to reduce these inequalities?
     WHAT DO WE MEAN BY SPATIAL 
           INEQUALITIES?
Primary concern is with:
• income per capita
• unemployment

Other variables:
• economic activity rates
• employment growth
• labour productivity

Wider view of spatial inequalities:
• health, crime, exclusion, educational outcomes
   REGIONAL INCOME CONVERGENCE
Convergence due to:
• factor mobility: look for highest rate of 
  return

• transfer of technology (‘catch-up’)

• government policy
  - spatial policies
  - education policy
  - fiscal transfers
CONVERGENCE: WHY SO SLOW?

• Barriers to labour mobility
 
• Firms reluctant to move from high-wage to 
   low-wage regions (within countries)
 
• Powerful divergent processes favour high-growth
   regions
  - knowledge-rich regions generate new ideas
  - faster transfer of ideas in knowledge-rich regions 
  - scale economies & agglomeration economies   
  - growth stimulates further growth
UNEMPLOYMENT PERSISTENCE

• adverse workforce characteristics
  - education, skills, age, ethnicity 

• cumulative effects of unemployment duration
   - probability of getting a job falls
   - skills gap widens

• reluctance of firms to invest in high-%u regions
   - low skill levels
   - poor infrastructure
      Cumulative causation: the role of human capital



 New products
 New processes      Competitiveness                    Human capital
 Capital / labour




Investment          Economic          In-migration         Skill mix
- existing firms    performance:      of high-skill 
- FDI               income and        workers
                    wealth


                                                          Educational
  New firm                                                outcomes
  formation
IN-MIGRATION OF HIGH-SKILL WORKERS
EMPIRICAL ANALYSIS

Processes to be investigated:

• production of human capital 
 - by schools
 - through further education (staying-on)

• inward migration of high-skill workers
 
• new firm formation

• creation of new products & new processes
 
                       Family     School     Skill     Population    Average    Unemp   GDP per    Ind mix
                      and peer    quality    mix        (growth,     earnings            capita 
Dependent              group                           ethnic mix)                        and 
variables                                                                                wealth



1. Educational 
attainment               +          +         +            +                                           



2. Proceeding to 
further / HE             +          +         +            +                                           



3. In-migration of 
high-skill workers                  +         +            +            +         +                    



4. New firms 
                                              +            +            +         +        +         +



5. New products /                                                                                      
    new processes                             +            +            +         +        +          +
SOME KEY DRIVERS OF PRODUCTIVITY
                 CONCLUSIONS

1. Regional inequalities: enormous and persistent

2. Economically desirable and politically necessary to 
   aim for greater convergence in economic 
   performance

3. Government intervention : a necessary condition for 
   reducing regional inequalities

4. Broadly-based (holistic) policies are needed:
• industry policy, employment policy, urban policy 
   and education policy

								
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