The spacial pattern of economic activity and inactivity in Britain: people or place effects?

Incapacity Benefit claimants are the primary target group in the next phase of the Government's Welfare-to-Work strategy. In this paper we perform a decomposition to statistically account for the part played by area-based and individual-based factors, in differential rates of employment, unemployment, inactivity and recorded sickness, across NUTS level 2 areas. Spatial variation in long-term sickness and disability cannot simply be attributed to prevailing population structures, and is more likely to be a manifestation of regional imbalances in labour demand and supply. The implication is that the success of supply-side policies is likely to be constrained by the concentration of Incapacity Benefit claimants in demand-deficient areas