Estimating the effects of government office dispersal: An application of demand constrained shadow wages

In this paper, a model is developed to identify the net national employment effect and the particular shadow wage associated with Government office dispersal. The approach views the opportunity cost of labour as being determined by a demand constraint reflecting the desire of Government to maintain a constant ‘pressure of demand’. The model allows for several simultaneous effects of dispersal on the ‘pressure of demand’ and specifies the operation of the labour market in some detail. The solution to the model shows the net employment effect to be positive suggesting the importance of dispersal as an instrument of regional policy.