Understanding the role of subsectoral structure in inter-regional sectoral productivity disparities

Abstract Spatial variations in productivity across the UK continue to be a challenge. Exploring the roots of differences in productivity between places can make an important contribution to the design of policy responses. This study focuses on the inter-regional subsectoral structure and examines whether the different mix of activities that get aggregated under the sectoral headings could provide insights into the reasons for the regional productivity disparities, drawing upon employment data at the 5-digit SIC level for the English LEP areas. Our analysis reveals that subsectoral compositions can substantially determine a region’s sectoral productivity performance, offering important clues to our understanding of inter-regional disparities.