Business Productivity and Area Productivity in Rural England

Abstract

Webber D., Curry N. and Plumridge A. Business productivity and area productivity in rural England, Regional Studies. Rural area productivity and rural business productivity measure different things. This paper presents a empirical analysis of labour productivity differentials across the new Department for Environment, Food and Rural Affairs (DEFRA) definition of ‘rural’. Labour productivity is 21% (13%) lower in sparse (less sparse) rural areas compared with urban areas. Labour productivity in less sparse and urban areas appears to depend on similar factors. Labour productivity in sparse areas strongly relates to a different industrial structure and plants in sparse areas gain less benefit from larger capital stocks. Policy needs to be aware of these differences if the urban–rural productivity divide is to be reduced.

Webber D., Curry N. et Plumridge A. La productivité du commerce et la productivité des espaces ruraux anglais, Regional Studies. La productivité des espaces ruraux et la productivité du commerce mesurent des choses différentes. Cet article cherche à présenter une analyse empirique des écarts de la productivité du travail à partir de la nouvelle définition du rural d'après le Department for Environment, Food and Rural Affairs (DEFRA). Il s'avère que la productivité du travail est de 21% (15%) moins élevée dans les zones rurales moins peuplées (plus peuplées) par rapport aux zones urbaines. Il semble que la productivité du travail dans les zones moins peuplées et dans les zones urbaines dépendent des facteurs similaires. La productivité du travail dans les zones moins peuplées se rapporte étroitement à une structure industrielle différente, et les établissements situés dans les zones moins peuplées profitent moins des stocks de capital plus importants. La politique devrait tenir compte de ces différences dans le but de réduire l'écart urbano–rural de la productivité.

Rural Productivité Compétences Structure industrielle

Webber D., Curry N. und Plumridge A. Produktivität von Betrieben und Gebieten im ländlichen England, Regional Studies. Bei der Ermittlung der Produktivität von ländlichen Gebieten und der von ländlichen Betrieben werden unterschiedliche Dinge gemessen. In diesem Beitrag stellen wir eine empirische Analyse der Differentiale von Arbeitsproduktivität vor, wobei das gesamte Spektrum der neuen Definition des Begriffs ‘ländlich’ durch die Department for Environment, Food and Rural Affairs (DEFRA) berücksichtigt wird. Wir stellen fest, dass die Arbeitsproduktivität in dünn (weniger dünn) besiedelten ländlichen Gebieten im Vergleich zu Stadtgebieten um 21% (13%) niedriger ausfällt. Die Arbeitsproduktivität in weniger dünn besiedelten sowie in Stadtgebieten scheint von ähnlichen Faktoren abzuhängen. Die Arbeitsproduktivität in dünn besiedelten Gebieten steht in einem engen Zusammenhang zur unterschiedlichen industriellen Struktur; die Anlagen in dünn besiedelten Gebieten profitieren weniger von größerem Fremdkapital. Die Politik muss sich dieser Unterschiede bewusst sein, wenn die Unterschiede in der Produktivität von ländlichen und städtischen Gebieten verringert werden sollen.

Ländlich Produktivität Qualifikationen Industriestruktur

Webber D., Curry N. y Plumridge A. Productividad comercial y la productividad según áreas en las zonas rurales de Inglaterra, Regional Studies. Para medir la productividad de zonas rurales y la productividad de negocios rurales se utilizan métodos diferentes. En este artículo presentamos un análisis empírico de los diferenciales de productividad laboral según la nueva definición de lo Department for Environment, Food and Rural Affairs (DEFRA) de lo que significa ‘rural’. Observamos que la productividad laboral es un 21% menor en zonas rurales poco pobladas (13% menor en zonas rurales más pobladas) en comparación con zonas urbanas. La productividad laboral en zonas rurales más pobladas y en zonas urbanas parece depender de factores similares. La productividad laboral en zonas poco pobladas está fuertemente ligada a una estructura industrial diferente y las plantas en zonas poco pobladas obtienen menos beneficios de mayor capital social. A fin de poder reducir la división de la productividad en zonas urbanas y rurales es necesario que los líderes políticos estén al corriente de estas diferencias.

Rural Productividad Habilidades Estructura industrial

Keywords:

• Rural
• Productivity
• Skills
• Industrial structure

JEL classifications:

• O18
• R3

Acknowledgements

This work contains statistical data from the Office of National Statistics (ONS) which is Crown copyright and reproduced with the permission of the controller of Her Majesty's Stationery Office (HMSO) and Queen's Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research data sets that may not exactly reproduce National Statistics aggregates. Any errors are the authors' responsibility.

Notes

The ‘traditional’ rural economy (agriculture, forestry, mining) invariably is omitted from this analytical theme as it has no clear urban counterpart and its contribution to rural gross value added is slight (CURDS, 2003). Studies too have assessed the external influences of firm performance (labour and premises supply, raw materials, the availability of knowledge) for urban and rural areas, and also internal factors such as entrepreneurship and motivation. They have looked at individual influences (North, 1998) and several influences simultaneously to try and determine their relative strength (Keeble and Tyler, 1995; North and Smallbone, 2000). Methodologies and the geographical scale of assessments have been equally diverse, with use being made of national data sets (Fothergill and Gudgen, 1982), bespoke numeric (Galloway and Mocherie, 2005) and attitudinal (Keeble and Nachum, 2002) questionnaires, and more in-depth qualitative surveys (Jarvis and Dunham, 2003), each with their own legitimacy.

Such ‘quality-of-life’ factors were first noted as a locational determinant in America in the 1950s (Greenhut, 1956; Tiebout, 1957). Tiebout was to describe the smaller return that entrepreneurs were prepared to make at that time in exchange for living in a ‘nice community’, often referred to as ‘psychic income’. More recently, such environmental factors have been identified as being both a spur to relocate (North, 1998) and a clear influence on performance (Johnson and Rasker, 1995).

Keeble and Tyler define this as: ‘deliberate and conscious efforts of companies to enhance their competitive edge across all activities – such as production, marketing and finance – necessary for successful business operation’ (p. 978).

As firms can have more than one plant, comparable results are generated for the whole sample and then only for single-plant firms.

A final issue concerning the data is the confidentiality of respondents. One criterion relevant here is that data cannot be associated with small areas where fewer than ten respondent firms are located. This places a lower limit on the level of spatial disaggregation to which the analysis can be applied. It does not affect this study, however, because the purpose of this investigation is to evaluate labour productivity differences across firms that are located across the three elements of DEFRA's rural definition (urban, rural less sparse, and rural sparse) only. To reduce any further unintended inference from the results that might possess some disclosure issues, the constants in regression results are not reported; this is common in papers and reports that use this database.

Despite CURDS (2003) claiming that the competition driver is not significant for rural productivity at the subregional scale, DEFRA (2005a) reintroduces it as a driver in its more recent review.

One immediate observations is the large drop in R 2 for the full and subsample. The main reason for this is probably that the single-plant firms are more heterogeneous than the plants in the full sample.