Linking National and Regional Income Inequality: Cross-Country Data Harmonization and Analysis

Lead Research Organisation: London School of Economics and Political Science
Department Name: Centre for Economic Performance

Abstract

Our study focuses on income inequality in towns and cities within countries and how this has changed over time in five high-income countries. In recent years, academic research has highlighted the rise of income inequality, particularly the increase of top 1% income share, and the associated social, economic and political problems. It is becoming increasingly clear that these national income inequalities are driven in part by income inequalities within countries, with a divide between the 'superstar' global cities (London, Paris, New York) and 'left behind' ex-industrial towns. This is apparent in the rise of 'populist' politics, in which people living in economically declining places are feeling the pull of simplistic solutions to complex social and economic problems.

Governments and international organisations have become increasingly aware of the problems associated with national economic inequality, aided by existing research that provides evidence from different countries. To help governments find ways to spread prosperity more evenly across their towns, cities and regions, there is a need for internationally comparable evidence to show how different countries perform in terms of geographic inequalities.

The lack of consistent and comparable datasets on national inequality decomposed into sub-national regions has so far prevented the investigation of fundamental questions: What is the influence of growing disparities across and within local areas on overall inequality? Is it that a few 'superstar' cities are the main engines of country-level trends? Does the divergent evolution of national inequality across countries emerge from trends at the sub-national level? How are local costs of living in different areas evolving over time and across countries? What are the main geographic division lines in terms of income and economic activity within countries?

Our study will examine trends in geographic income inequality across five high-income countries - Canada, France, Germany, the United Kingdom and the United States - since the 1970s. We have brought together an international expert team of geographers with experience of studying geographic inequality and economists experienced in measuring national income inequality. The first objective of our research is to develop a method for analysing geographic income inequality in a way that can be compared between countries. We will tackle three big problems: defining comparable geographic areas, having consistent measures of income and adjusting incomes for the varied local cost of living (e.g. housing costs). We will use data from national tax records, from registries of workers' earnings and household surveys. Using this method, our second objective is to assess the importance of geographic inequalities in driving national income inequalities across our five study countries. Third, we will analyse the common trends and differences between and within countries, and investigate the causes of these trends. Our final objective is to use this project as the foundation of a global database that provides information about inequalities between places. Our vision is that this will act as a point of information for researchers to study the causes of geographic income inequality, and for governments to understand how their country compares to others.
 
Description The research has delivered new insights into the development of spatial inequalities across four countries, the UK, France, Germany, and Canada. Our results show that (a) spatial inequality in the UK is high, relative to comparator countries; (b) geography is relatively important to UK wages, but (c) spatial inequality has been largely flat over the past two decades, and the lion's share of increases came in the 1980s. The results suggest that narratives of recent growth in spatial inequality are untrue, highlight the importance of labour market institutions in driving inequality, but show that spatial inequality in the UK has major consequences for people's lives.
Exploitation Route We will be making our data available to academics and policymakers.
Sectors Government

Democracy and Justice

 
Description Our emerging findings have important implications for government policy in the UK and the Levelling Up agenda in particular. We are developing impact pathways in our project, but have already established strong relationships with policy actors in the UK, in the civil service, current government, and the opposition. The research has also been influential with the European Commission and with the OECD. Our work has already been cited by the Gordon Brown constitutional review for the opposition and we have further meetings lined up which will help us translate these early relationships into further impact.
First Year Of Impact 2022
Sector Government, Democracy and Justice
Impact Types Policy & public services

 
Description A New Britain: Renewing Our Democracy and Rebuilding Our Economy - work cited in support of key recommendation
Geographic Reach National 
Policy Influence Type Citation in other policy documents
URL https://labour.org.uk/wp-content/uploads/2022/12/Commission-on-the-UKs-Future.pdf
 
Description Citation in the European Commission Cohesion Report
Geographic Reach Europe 
Policy Influence Type Citation in other policy documents
 
Description Participation in ONS UK Population Theme Advisory Board
Geographic Reach National 
Policy Influence Type Participation in a guidance/advisory committee
 
Title Code for Dorn crosswalk method 
Description Open source R and Stata code to implement the method used by David Dorn to translate data published for US Public Use Microdata Areas to Commuting Zones. This allows users to recreate the Dorn method and also apply it to other time points and countries, as we intend to do for the UK and Germany. 
Type Of Material Data analysis technique 
Year Produced 2022 
Provided To Others? Yes  
Impact None as yet: we will be using this code to create crosswalks for 1975 'Areas' in the UK New Earnings Survey, as a step towards calculating the first measures of spatial inequality for functional economic areas for the 1970s and 1980s for the UK. This work will be completed in 2022. 
URL https://github.com/mfransham/puma-cz-cw-dorn-rep
 
Title Lookup tables between historic small area geographies and modern geographies 
Description The published R code creates lookup tables between historic small area geographies and modern geographies, so that it is possible to aggregate historic small area Census data to larger modern boundaries. The modern boundaries currently of interest (as part of the Linking National and Regional Inequalities project) are 2011 Travel to Work Areas and 2021 local authority districts for Great Britain. The small areas depend upon the Census year, as they have changed over time. The code and the resultant lookup tables are available. 
Type Of Material Database/Collection of data 
Year Produced 2022 
Provided To Others? Yes  
Impact None as yet - part of the LNRI project 
URL https://github.com/mfransham/2022-09-geographic-lookups
 
Description Constructing measures of spatial income inequality for the US 
Organisation McGill University
Country Canada 
Sector Academic/University 
PI Contribution The contributions of the UK team was to: - create a link between the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - obtaine the US Census data - provide a detailed description of the data - produce a portion of the descriptive statistics - conduct robusntess checks of the preliminary results
Collaborator Contribution The contributions of the partners was to - develop a code for linking the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - produce a portion of the descriptive statistics - conduct robusntess checks of the preliminary results
Impact - a cross-walk between the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - a set of descriptive statistics describing the evolution of spatial inequality in the US
Start Year 2021
 
Description Constructing measures of spatial income inequality for the US 
Organisation University of Bonn
Country Germany 
Sector Academic/University 
PI Contribution The contributions of the UK team was to: - create a link between the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - obtaine the US Census data - provide a detailed description of the data - produce a portion of the descriptive statistics - conduct robusntess checks of the preliminary results
Collaborator Contribution The contributions of the partners was to - develop a code for linking the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - produce a portion of the descriptive statistics - conduct robusntess checks of the preliminary results
Impact - a cross-walk between the US PUMA area in the data and the preferable geographic unit for the analysis (Commuting Zone) - a set of descriptive statistics describing the evolution of spatial inequality in the US
Start Year 2021
 
Description Developing a common definition of income across countries 
Organisation McGill University
Country Canada 
Sector Academic/University 
PI Contribution The aim of the collaboration was to develop consistent and feasible measures of income, accounting for the local costs of living. My contribution was to: - provide expert knowledge on the UK administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the UK administrative and survey data - propose a method for estimating couple-split definition of income in the UK data - show preliminary descriptive statistics on income in the UK administrative and survey data
Collaborator Contribution The contributions of my partners were similar as mine, but focused on other countries. In particular: - provide expert knowledge on the FR/DE/CA/US administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the FR/DE/CA/US administrative and survey data - propose a method for estimating couple-split definition of income in the FR/DE/CA/US data - show preliminary descriptive statistics on income in the FR/DE/CA/US administrative and survey data
Impact - Establishing a common definiton of income across countries. We have specified income sources of interest; temporal aggregation of income; the method for imputing missing incomes; the method for spliting income across spouses - Presented preliminary descrpiptive statistics on the between- regional income inequlity across countries
Start Year 2021
 
Description Developing a common definition of income across countries 
Organisation University Paris Sud
Department University of √Čvry Val-d'Essonne
Country France 
Sector Academic/University 
PI Contribution The aim of the collaboration was to develop consistent and feasible measures of income, accounting for the local costs of living. My contribution was to: - provide expert knowledge on the UK administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the UK administrative and survey data - propose a method for estimating couple-split definition of income in the UK data - show preliminary descriptive statistics on income in the UK administrative and survey data
Collaborator Contribution The contributions of my partners were similar as mine, but focused on other countries. In particular: - provide expert knowledge on the FR/DE/CA/US administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the FR/DE/CA/US administrative and survey data - propose a method for estimating couple-split definition of income in the FR/DE/CA/US data - show preliminary descriptive statistics on income in the FR/DE/CA/US administrative and survey data
Impact - Establishing a common definiton of income across countries. We have specified income sources of interest; temporal aggregation of income; the method for imputing missing incomes; the method for spliting income across spouses - Presented preliminary descrpiptive statistics on the between- regional income inequlity across countries
Start Year 2021
 
Description Developing a common definition of income across countries 
Organisation University of Bonn
Country Germany 
Sector Academic/University 
PI Contribution The aim of the collaboration was to develop consistent and feasible measures of income, accounting for the local costs of living. My contribution was to: - provide expert knowledge on the UK administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the UK administrative and survey data - propose a method for estimating couple-split definition of income in the UK data - show preliminary descriptive statistics on income in the UK administrative and survey data
Collaborator Contribution The contributions of my partners were similar as mine, but focused on other countries. In particular: - provide expert knowledge on the FR/DE/CA/US administrative and survey data containing information on income; and regional data on the local cost of living indexes - propose a method for imputing missing components of income in the FR/DE/CA/US administrative and survey data - propose a method for estimating couple-split definition of income in the FR/DE/CA/US data - show preliminary descriptive statistics on income in the FR/DE/CA/US administrative and survey data
Impact - Establishing a common definiton of income across countries. We have specified income sources of interest; temporal aggregation of income; the method for imputing missing incomes; the method for spliting income across spouses - Presented preliminary descrpiptive statistics on the between- regional income inequlity across countries
Start Year 2021
 
Description Spatial units for comparative studies of geographic income inequality 
Organisation McGill University
Country Canada 
Sector Academic/University 
PI Contribution During 2021 we organised six project team meetings to discuss the adoption of a comparable set of geographic units that would enable comparison between our five study countries and over time. We contribute the organisation of these project meetings, research on criteria to evaluate these geographic units, calculation of evaluation metrics for UK geographies and research into US geographical units.
Collaborator Contribution Our partners in France, Germany and Canada contributed research into existing functional urban area geographies for their countries plus calculation of comparable evaluation metrics for each country and a number of candidate economic geography units.
Impact A working paper is currently being written to outline our evaluation and selection of these comparative geographies. The collaboration is multidisciplinary; the main disciplines involved are economics and geography.
Start Year 2021
 
Description Spatial units for comparative studies of geographic income inequality 
Organisation University of Bonn
Country Germany 
Sector Academic/University 
PI Contribution During 2021 we organised six project team meetings to discuss the adoption of a comparable set of geographic units that would enable comparison between our five study countries and over time. We contribute the organisation of these project meetings, research on criteria to evaluate these geographic units, calculation of evaluation metrics for UK geographies and research into US geographical units.
Collaborator Contribution Our partners in France, Germany and Canada contributed research into existing functional urban area geographies for their countries plus calculation of comparable evaluation metrics for each country and a number of candidate economic geography units.
Impact A working paper is currently being written to outline our evaluation and selection of these comparative geographies. The collaboration is multidisciplinary; the main disciplines involved are economics and geography.
Start Year 2021
 
Description Spatial units for comparative studies of geographic income inequality 
Organisation University of Paris-Saclay
Country France 
Sector Academic/University 
PI Contribution During 2021 we organised six project team meetings to discuss the adoption of a comparable set of geographic units that would enable comparison between our five study countries and over time. We contribute the organisation of these project meetings, research on criteria to evaluate these geographic units, calculation of evaluation metrics for UK geographies and research into US geographical units.
Collaborator Contribution Our partners in France, Germany and Canada contributed research into existing functional urban area geographies for their countries plus calculation of comparable evaluation metrics for each country and a number of candidate economic geography units.
Impact A working paper is currently being written to outline our evaluation and selection of these comparative geographies. The collaboration is multidisciplinary; the main disciplines involved are economics and geography.
Start Year 2021
 
Description Meeting with Lisa Nandy, Shadow Minister for Levelling Up 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact We met to discuss Levelling Up with Shadow Ministerial team
Year(s) Of Engagement Activity 2023
 
Description Meeting with a civil servant from the HM Treasury 
Form Of Engagement Activity Participation in an open day or visit at my research institution
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact It was an one-to-one meeting with a civil servant from HMT. We described our project, its finding, and learned about the on-going related work at the treasury.
Year(s) Of Engagement Activity 2022
 
Description Participation in roundtable with Shadow Treasury team 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Neil Lee (PI) was involved in a discussion with the Shadow Treasury team, with acknowledgment afterwards from Rachel Reeves MP
Year(s) Of Engagement Activity 2022
 
Description Podcast: DG Regio's Regio Waves 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Neil Lee presented project findings on the DG Regio 'Regio Waves' podcast in January 2024
Year(s) Of Engagement Activity 2024
 
Description Presentation at CURDS Levelling up Seminar 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation at a CURDS - MHCLG seminar on Levelling Up
Year(s) Of Engagement Activity 2022
 
Description Presentation at Centre for Cities lunchtime talk 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Participation on a Centre for Cities webinar on Fiscal Devolution and Spatial Inequality
Year(s) Of Engagement Activity 2024
URL https://www.centreforcities.org/event/what-next-for-fiscal-devolution-in-urban-areas
 
Description Presentation at Conservative party Conference 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Neil Lee spoke at Conservative party Conference Panel, alongside George Freeman, on Levelling Up. Follow up included journalists and politicians
Year(s) Of Engagement Activity 2022
 
Description Presentation at OECD session at European Week of Cities and Regions 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation at an OECD organised session at the European Week of Cities and Regions, Brussels, October 2024
Year(s) Of Engagement Activity 2024
URL https://regions-and-cities.europa.eu
 
Description Presentation at UCL Policy Lab session 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Presentation at UCL Policy Lab session on devolution in England, attended by representatives of Labour's shadow Levelling Up team.
Year(s) Of Engagement Activity 2024
 
Description Presentation at UK Department for Levelling Up, Housing and Communities 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact One hour presentation of the project results to a group of policymakers from the UK Department for Levelling Up, Housing and Communities. The audience was very interested in the project, provided valuable feedback and requested further updates on the project developments.
Year(s) Of Engagement Activity 2022
 
Description Presentation at the European Commission Regional and Urban Policy 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact One hour presentation of the project results to a group of policymakers from the European Commission. The audience was very interested in the project, provided valuable feedback and requested further updates on the project developments.
Year(s) Of Engagement Activity 2022
 
Description Presentation for policymakers at the European Commission DG Regio 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact This was a high profile presentation to a group of policymakers from EC DG Regio, OECD and World Bank. I was presenting the evidence from the project, which sparked a lively debate. The project has been described as "crucial for the future of evidence-based policymaking in Europe". The all involved international organisations expressed a strong interest in developing and contributing to the project.
Year(s) Of Engagement Activity 2023
 
Description Presentation: How can we tackle inequalities through British public policy? 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Public/other audiences
Results and Impact Presentation at an LSE public event on 'How can we tackle inequalities through British public policy?'
Year(s) Of Engagement Activity 2024
URL https://www.lse.ac.uk/Events/2024/03/202403051830/inequalities
 
Description Radio Interview discussing the Project Results 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Media (as a channel to the public)
Results and Impact Pawel Bukowski gave a 20-min interview in Radio TOK FM, which is the largest information-focused radio station in Poland.
Year(s) Of Engagement Activity 2023
URL https://audycje.tokfm.pl/podcast/144662,Geografia-bogactwa-nierownosci-w-Polsce
 
Description Roundtable with shadow employment team 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact We convened a session with the shadow employment team, including Alison McGovern MP and Karen Buck. We discussed regional inequalities in labour market participation and followed up to make links with other academics
Year(s) Of Engagement Activity 2022
 
Description Summary of the Research in CentrePiece and Vox.Eu 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact We write non-academic pieces summarising the project. These were published in the CentrePiece magazine (print) and on the website Vox.Eu - a leading platform for popularising economic research.
Year(s) Of Engagement Activity 2023,2024
URL https://cep.lse.ac.uk/pubs/download/cp674.pdf
 
Description Video on Levelling Up for LSE 'Understanding the economy' series 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other audiences
Results and Impact Neil Lee featured in the LSE 'Understanding the economy' series of short social media videos to explain contemporary economic issues
Year(s) Of Engagement Activity 2023