ABSTRACT
This chapter provides an overview of the nature of spatial labour market disparities in the UK and discusses the extent to which institutional reform in the labour market might help to alleviate them. During the 1970s the labour market in the United Kingdom was increasingly characterised as being inflexible and, in particular, operating in a variety of ways which constrained macroeconomic performance and international competitiveness. Unemployment rose in prosperous regions because labour supply has grown and employment changed little, whereas in depressed regions it rose less because employment falls have been partially offset by labour force withdrawals. Standard human capital models of migration predict that migration flows will tend to be from low wage/high unemployment areas into high wage/low unemployment areas. Wage inflationary pressures were transformed across regions through national collective bargaining, even though local labour market conditions may not have justified such an increase.
