Mind the Gap: Unemployment in the New Eu Regions

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Mind the Gap: Unemployment in the New EU RegionsAnna Maria Ferragina Francesco Pastore D I S C U S S I O N P A P E R S E R I E S ABSTRACT Mind the Gap: Unemployment in the New EU RegionsThe paper surveys the theoretical and empirical literature on regional unemployment during transition in Central and Eastern Europe. The focus is on Optimal Speed of Transition (OST) models and on comparison of them with the neoclassical tradition. In the typical neoclassical models, spatial differences essentially arise as a consequence of supply side constraints and institutional rigidities. Slow-growth, high-unemployment regions are those with backward economic structures and constraints on factors mobility contribute to making differences persistent. However, such explanations leave the question unanswered of how unemployment differences arise in the first place. Economic transition provides an excellent testing ground to answer this question. Prefiguring an empirical law, the OST literature finds that the high degree of labour turnover of high unemployment regions is associated with a high rate of industrial restructuring and, consequently, that low unemployment may be achieved by implementing transition more gradually. Moreover, international trade, FDI and various agglomeration factors help explain the success of capital cities compared to peripheral towns and rural areas in achieving low unemployment.JEL Classification: J6, P2, R1, R23

Sectoral shifts, diversification and regional unemployment: evidence from local labour systems in Italy

“…The relationship between specialization and unemployment growth is strongly nonlinear, however. For low specialized LLSs, our results are fully consistent with the idea that inter-sectoral mobility helps absorb adverse labour market shocks (Simon and Nardinelli, 1992;Ferragina and Pastore, 2008) and that sectoral diversification may offer more job opportunities and, thus, improve local labour market performance (Jacobs, 1969). After a certain threshold of specialization, however, Marshallian externalities gain relevance and mitigate the previous pattern, so that the ultimate effect of specialization on unemployment growth is not statistically significant in highly specialized territorial units.…”

“…It is widely recognized indeed that common shocks may generate asymmetric effects across industries: in fact, regions that are highly specialized in low-sensitive industries are expected to exhibit low vulnerability to aggregate disturbances; and viceversa. Conversely, more diversified economies should be more able to absorb the adverse labour market effects of common shocks through inter-sectoral mobility, as the portfolio hypothesis suggests (Simon, 1988;Simon and Nardinelli, 1992;Elhorst, 2003;Ferragina and Pastore, 2008). Jacobs (1969) had already reached similar conclusions, by arguing that sectoral diversification may offer more job opportunities and, thus, reduce the unemployment rate of a region.…”

“…A number of studies have analyzed the effects of sectoral shifts and industry specialization patterns on local labour market performances and, especially, local unemployment (Lilien, 1982;Samson, 1985;Newman and Topel, 1991;Chiarini and Piselli, 2000;Krajnyak and Sommer, 2004;Newell and Pastore, 2006;Ferragina and Pastore, 2008;Robson, 2009, among others). The present study contributes to this literature by focusing on Italian Local Labour Systems (LLSs), over the most recent period (2004)(2005)(2006)(2007)(2008), when huge worker reallocation mainly caused by changes in the international context (in primis, through foreign direct investments in the manufacturing sector from Western to Eastern European countries; see Basile et al 2011) has occurred.…”

Geographically Weighted Regression in the Analysis of Unemployment in Poland

“…There are numerous studies on the essence of unemployment (e.g., [15,16]) and its determinants (e.g., [7,[17][18][19]). In the literature we can also find a lot of articles that describe regional unemployment differentials in Poland which are one of the consequences of transition from a centrally planned to a market al location system in the presence of globalisation in the early 1990s [20][21][22]. In those studies specifying the factors affecting unemployment in Poland, conclusions are usually drawn for the entire country, a particular voivodeship (that is a highest-level administrative subdivision of Poland, corresponding to a province in many other countries; in European Union nomenclature it is termed NUTS 2) or generally at the regional level (NUTS 2).…”

Regional Dynamics of Unemployment in Poland A Convergence Approach

“…For example, Armstrong and Taylor (2000) argue that one should focus on the problem of adjustment speed as well as persistence of potential unemployment differentials, instead of aggregate convergence per se, since some effects may accumulate over time, effectively altering the direction of adjustments. Further on the theoretical grounds, Boeri and Terrell (2002) inquire whether these differentials could be explained on the grounds of optimal transition speed theory (Ferragina and Pastore (2008) provide an extensive review of this issue).…”