Data Feature: Earnings Biases in the United Kingdom Regional Accounts: Some Economic Policy and Research Implications

Abstract

Between the late 1970s and late 1980s, the UK Regional Accounts data suggest a much smaller rise in the South East earnings premium and consequently a much smaller increase in the regional dispersion of earnings than do the other sources of data. We discuss several possible explanations for this discrepancy and conclude it was probably due to problems at the Inland Revenue in allocating tax records across the regions. The historical unreliability of the Regional Accounts has implications for economic research on regional consumption and convergence and may have caused the poorest regions to miss out on EU Structural Funds. the editor and anonymous referee for helpful comments. We take full responsibility for any errors.1 Under the 1989±93 and 1994±9 European Community Structural Funds regulations, regions at NUTS level II whose per capita GDP, in a three year qualifying period which is typically four years before the funding period, is less than 75% of the Community average receive Objective I status and funding.

Earnings, unemployment, and housing in Britain

“…In this following section we estimate models of relative regional log earnings (taken from the New Earnings Survey, see Data Appendix for details, and Cameron and Muellbauer (2000) for discussion of regional data problems) for two types of workers and relative regional unemployment rates using data for 1972 to 1995 for the ten regions of Great Britain. The models take the following general form 10 :…”

Measuring Well-being and Exclusion in Europe's Regions

“…Cameron and Muellbauer (2000) argue that methods of constructing Regional Accounts data for the UK prior to 1995 led to serious biases in the estimations of regional employment income, and hence of regional GDP: in particular, income for the South East would have been biased downwards. But this bias had been corrected by 1995 and so should not affect the data presented here.…”

14 Housing and Personal Wealth in a Global Context

“…The other was the authors' scepticism over the accuracy of the regional accounts income data. Subsequently, Cameron and Muellbauer (2000) established that these data seriously understated the rise in relative incomes in the south east in the 1980s, probably resulting in an upward bias in the housing wealth effects being estimated. 5…”