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The spatial dimension of labour markets: an investigation of economic inequalities and a local employment shock

Schlüter, Teresa (2014) The spatial dimension of labour markets: an investigation of economic inequalities and a local employment shock. PhD thesis, London School of Economics and Political Science.

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This thesis consists of four chapters positioned at the interface of economics and geography. They analyse spatial disparities in economic activity using applied microeconometric methods. Chapter I describes trends in wage inequality once differences in local costs of living are taken into account. I use spatial variation in house prices to construct a local consumer price index and show that prices rose faster for non-graduates than for graduates between 2001 and 2011. In a period when nominal wage inequality came to a halt real wage inequality kept rising. Chapter II builds up on this result and analyses the effect of real wage differentials on working hours. Looking at individuals that face different wages and house prices as they move across labour markets, I find that working hours are significantly higher in low real wage areas. The effect is due to labour supply adjustments of low skilled workers implying that affordability considerations are more important than additional leisure options due to a higher amenity level. Within a city amenities are important determinants of an individual’s location decision. Chapter III looks at the role of amenities for skill specific sorting in British cities. An amenity value is inferred from a hedonic regression and correlated with neighbourhood as well as individual characteristics. The results suggest that holding income constant graduates are willing to pay 0.2% more for amenities than individuals with a lower educational status. Chapter IV studies the effect of a public sector employment shock on private sector employment using the relocation of the German government from Bonn to Berlin as a natural experiment. The findings indicate that the relocation of jobs generates localized employment spill-over effects in the service sector. 100 additional public sector jobs generate 60 private sector jobs up to a 1km distance from the area receiving the relocation.

Item Type: Thesis (PhD)
Additional Information: © 2014 Teresa Schlüter
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Geography and Environment
Supervisor: Overman, Henry G.

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