Tackling the UK's regional economic inequality: Binding constraints and avenues for policy intervention

Anna Stansbury, Dan Turner and Ed Balls
Additional contact information
Dan Turner: Centre for Progressive Policy
Ed Balls: King's College London and Harvard Kennedy School
Authors registered in the RePEc Author Service: Douglas Elmendorf

No WP24-12, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper analyzes binding constraints to productivity growth in the United Kingdom's regions outside London and the greater South East. These analyses challenge a number of common arguments about the UK's regional economic inequality problem. The authors find little evidence consistent with the hypotheses (i) that low shares of university graduates remain the primary constraint on growth for the UK's regions; (ii) that there is a generalized issue with access to finance for firms outside the South East; or (iii) that low or falling regional migration rates are to blame for the persistence of the UK's regional economic inequalities. Instead, they find evidence consistent with (i) a specific relative shortage of STEM degrees; (ii) binding transport infrastructure constraints within major non-London conurbations; (iii) a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for research and development (R and D); and (iv) missed opportunities for higher internal mobility due to London's overheating housing market. The authors also find some suggestive evidence consistent with constraints on access to early-stage equity financing for high growth-potential small and medium-sized enterprises in certain regions.

Keywords: Regional inequality; productivity; regional economics (search for similar items in EconPapers)
JEL-codes: O47 R12 R58 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-geo, nep-sbm and nep-ure
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Related works:
Journal Article: Tackling the UK’s regional economic inequality: binding constraints and avenues for policy intervention (2023)
Working Paper: Tackling the UK's Regional Economic Inequality: Binding Constraints and Avenues for Policy Intervention (2023)
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