Wage spillovers, inter-regional effects and the impact of inward investment

Nigel L. Driffield*, Karl Taylor

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper evaluates the extent of inter-industry and inter-regional wage spillovers across the UK. An extensive body of literature exists suggesting that wages elsewhere affect wage determination and levels of satisfaction, but this paper extends the analysis of wage determination to examine the effects of inward investment in the process. Thus far the specific effect of foreign wages on domestic wage determination has not been evaluated. We employ industry- and regional-level panel data for the UK, and contrast results from alternative approaches to space-time modelling. Each supports the notion that such wage spillovers do occur, though assumptions made concerning the modelling of spatial interaction are important. Further, such wage spillovers are more widespread for skilled than for unskilled workers and also lower in areas of high unemployment. © 2006 Regional Studies Association.

Original languageEnglish
Pages (from-to)187-205
Number of pages19
JournalSpatial economic analysis
Issue number2
Publication statusPublished - Nov 2006

Bibliographical note

This is a preprint of an article whose final and definitive form has been published in the Spatial Economic Analysis © 2006 Regional Studies Association; Spatial Economic Analysis is available online at: http://www.tandfonline.com/10.1080/17421770601009825


  • alternative wage
  • regional spillovers
  • wage determination


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