Spatial determinants of productivity: analysis for the Regions of Great Britain

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