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. This paper argues that United Kingdom Regional Accounts data on income from employment and hence personal income and gross domestic product per head for the last 20 years give a misleading picture of the development of regional differentials. These data are published in Economic Trends and Regional Trends and are widely used. They have informed public debates about such topics as Scottish and Welsh devolution. They are an important input for policy towards the English regions and for Wales, Scotland and Northern Ireland and are used to define the income criteria by which a