How do regional economies respond to crises? The geography of job creation and destruction in Sweden (1990–2010)

Abstract

Using Swedish longitudinal micro-data, the aim of this paper is to analyse how regional economies respond to crises. This is made possible by linking gross employment flows to the notion of regional resilience. Our findings indicate that despite a steady national employment growth, only the three metropolitan regions have fully recovered from the recession of 1990. Further, we show evidence of high levels of job creation and destruction in both declining and expanding regions and sectors, and that the creation of jobs is mainly attributable to employment growth in incumbent firms, while job destruction is primarily due to exits and micro-plants. Although the geography of resistance to crises and the ability of adaptability in the aftermath vary, our findings suggest that cohesive (i.e., with many skill-related industries) and diverse (i.e., with a high degree of unrelated variety) regions are more resilient over time. We also find that resistance to future shocks (e.g., the 2008 recession) is highly dependent on the resistance to previous crises. In all, this suggests that the long-term evolution of regional economies also influences their future resilience.

Local employment growth patterns and the Great Recession: The case of Spain

“…My results are, however, more in line with the studies of Capello et al. () and Fratesi and Rodríguez‐Pose () on European regions or Eriksson and Hane‐Weijman () for Swedish regions.…”

Territorial determinants and NUTS 3 regional performance: A spatial analysis for Italy across the crisis

“…For the latter explanatory variable, the spillover effect is weak and sometimes negative in the case of exports (stealing effect). Our results confirm those obtained in the literature (Eriksson & Hane-Weijman, 2017, see Section 3) which show a negative impact of specialization economies on growth. This is particularly true for exports where vulnerability hampers the growth process.…”

“…But a high degree of specialization and the density of economic activity may also be detrimental for economic growth (Deidda, Paci, & Usai, 2006). Glaeser, Kallal, Scheinkman, and Shleifer (1992) were the first to demonstrate that city/industries tend to grow faster if the surrounding areas are more diversified while Pede (2013) and Eriksson and Hane-Weijman (2017) have shown recently that a high degree of unrelated variety increases the regional resilience through time, given that diversified economies are less subject to business cycle volatility.…”

New directions in researching regional economic resilience and adaptation

“…• Regions which offer 'skill-related' employment opportunities facilitating intersectoral labour mobility, will retain and continue to develop their stock of human capital; while regions that do not have these features may lose part of their skill-base, which may consequently hinder their further economic development (e.g. Diodata & Weterings, 2015;Eriksson & Hane-Weijman, 2017;Martin, 2012;Otto, Nedelkoska, & Neffke, 2014).…”