Regional unemployment in the EU before and after the global crisis

Abstract

In this paper we empirically assess the evolution for the EU regions of both employment and unemployment before and after the Global Crisis. After a review of the literature on the theories and key determinants of regional unemployment, we shall overview the main findings concerning the labour market impact of the Global Crisis. The empirical analysis will initially be carried out at the national level including all EU countries; subsequently, we shall focus on the EU regions (at the NUTS-2 level), in order to detect possible changes in the dispersion of regional unemployment rates after the crisis. Our econometric investigations aim to assess the effect, on labour market performance, of previous developments in regional labour markets time series, as well as the importance of structural characteristics of the labour markets, in terms of the sectoral specialization of the regional economies. In fact, the local industry mix may have played a crucial role in shaping labour market performance in response to the crisis. In addition, we consider further characteristics of the regional labour markets, by including indicators of the level of precarization of labour and of the share of long-term unemployed, as indicators of the efficiency of the local labour markets. From a methodological viewpoint, we exploit eigenvector decomposition-based spatial filtering techniques, which allow us to greatly reduce unobserved variable bias -a significant problem in cross-sectional models -by including indicators of latent unobserved spatial patterns. Finally, we render a geographical description of the heterogeneity influence of past labour market performance over the crisis period, showing that the past performance has a differentiated impact on recent labour market developments.

Comparing Labor Market Performance: Some Stylized Facts and Key Findings

“…Different empirical studies, by considering diverse country samples and/or periods and using various econometric techniques and models, reached different conclusions regarding the specific impact of some or all of the above institutional variables (eg, OECD, 1994;Scarpetta, 1996;Nickell, 1997;Signorelli, 1997;Garcilazo and Spiezia, 2007;Bassanini and Duval, 2009;Feldmann, 2009;Arpaia and Curci, 2010). Others combined institutions and sub-national level variables to explain regional (un)employment rate differences and dynamics (eg, Signorelli, 2007 andMarelli et al, 2012a;Demidova and Signorelli, 2012). The lagged level of unemployment is often added to control for a persistence effect.…”

Further Widening or Bridging the Gap? A Cross-Regional Study of Unemployment across the EU Amid Economic Crisis

“…It is argued that the regional dimension of unemployment is not only important from the empirical perspective but from the policy implementation as well [15]. A thorough analysis of the patterns and spatial arrangements of regional unemployment and the associated disparities help policy makers to implement the right policy instruments that will decrease high unemployment rates.…”

“…A thorough analysis of the patterns and spatial arrangements of regional unemployment and the associated disparities help policy makers to implement the right policy instruments that will decrease high unemployment rates. For example, regional unemployment differentials have been proved to be in many cases wide and persistent, with a trend of regions of low unemployment clustered together [15]. Such, differentials reveal core-periphery patterns and that is why key labor market policies of several European countries have been decentralized at the sub-national level to better tackle regional unemployment [16].…”

“…The main conclusion of the study is that employing a usual two-step approach compared to the simultaneous approach suggested may infer bias in analyzing regional unemployment disparities. Marelli et al [15] empirically assessed the employment and unemployment changes in the European regions during the financial crisis between 2007 and 2010. In particular, they applied econometric tools to inspect the impact of the economic crisis focusing on identifying structural weak points in regional labor market at the NUTS 2 level.…”

Factors and Determinants of Interregional Unemployment Rate Differences in Rural Russia

“…Some papers assess the demographic effect and the effect of education on unemployment in Europe [11] [12]. The behavior of regional unemployment in the EU countries before and after the financial crisis is also examined [13]. The relationship between financial development and labor market volatility is investigated by Darcillon [14].…”