European regions have experienced a polarisation of their unemployment rates between 1986 and 1996, as regions with intermediate rates have moved towards either extreme. This process has been driven by changes in regional employment, only partly offset by labour force changes. Regions' outcomes have closely followed those of neighbouring regions. This is only weakly explained by regions being part of the same Member State, having a similar skill composition, or broad sectoral specialisation. Even more surprisingly, foreign neighbours matter as much as domestic neighbours. All of this suggests a reorganisation of economic activities with increasing disregard for national borders.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
2255.
Find related papers by JEL classification: E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution F15 - International Economics - - Trade - - - Economic Integration R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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