Recent trends in the spatial distribution of human capital: Are skill levels converging across regions in England and Wales?

Abstract

AbstractIn modern knowledge‐based societies human capital is the single most important determinant of regional inequalities in productivity and standards of living. Using a newly constructed data set that allows the analysis of educational attainments at different levels of geography, this paper evaluates spatial inequalities and the degree of convergence in the distribution of human capital across areas in England and Wales during the second decade of the 21st century. Our results show this was a period characterised by a large increase in educational attainment and skill intensity. However, the growth in skill intensity was far from uniform across space. In particular, we find strong evidence of both absolute σ‐divergence and β‐convergence in the distribution of skills. Thus, even if low‐skill areas grew on average more than other areas with higher skill intensity at the start of the period, the stochastic dominance analyses provide strong evidence of an unambiguous increase in absolute inequalities so that by end of the decade the skill gap between low‐ and high‐skill areas had significantly widened. We present new spatial and aspatial evidence that sheds light on those inequalities and the changes in the spatial configuration of human capital over the last decade. Despite the implementation of policies aimed at reducing regional inequalities, many low skill areas struggled to attract talent so that the gap with most skilled areas widened over that period likely contributing to the persistence of the well‐documented large spatial economic inequalities in this country.