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Regional Unemployment and Human Capital in Transition Economies

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  • Jurajda, Stepan
  • Terrell, Katherine

Abstract

Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labour mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labour and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labour-market institutions, such as guaranteed welfare income raising effective minimum wages.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6569.

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Date of creation: Nov 2007
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Handle: RePEc:cpr:ceprdp:6569

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Keywords: Complementarities; Czech Republic; Human capital; Hungary; Labour Mobility; Regional labour markets; Romania; Spillovers; Transition economies; Ukraine; Unemployment;

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Cited by:
  1. Marian Dinga, 2011. "The Role of Investment Incentives in Regional FDI Reallocation: A Regression-Discontinuity Approach," CERGE-EI Working Papers wp438, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Štěpán Jurajda & Juraj Stančík, 2013. "Organization and Firm Performance in the Czech Republic," Prague Economic Papers, University of Economics, Prague, University of Economics, Prague, vol. 2013(1), pages 85-110.
  3. Ciżkowicz, Piotr & Kowalczuk, Michał & Rzońca, Andrzej, 2014. "Heterogeneous determinants of local unemployment in Poland," MPRA Paper 56858, University Library of Munich, Germany.
  4. Barbara Gebicka, 2010. "College Degree Supply and Occupational Allocation of Graduates the Case of the Czech Republic," CERGE-EI Working Papers wp407, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  5. Filer, Randall K. & Münich, Daniel, 2013. "Responses of private and public schools to voucher funding," Economics of Education Review, Elsevier, Elsevier, vol. 34(C), pages 269-285.
  6. Elizabeth Brainerd, 2010. "Human Development in Eastern Europe and the CIS Since 1990," Human Development Research Papers (2009 to present) HDRP-2010-16, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  7. Kahanec, Martin & Kureková, Lucia Mýtna, 2014. "Did Post-Enlargement Labor Mobility Help the EU to Adjust During the Great Recession? The Case of Slovakia," IZA Discussion Papers 8249, Institute for the Study of Labor (IZA).
  8. Enrico Marelli & Roberto Patuelli & Marcello Signorelli, 2012. "Regional unemployment in the EU before and after the global crisis," Post-Communist Economies, Taylor & Francis Journals, vol. 24(2), pages 155-175, January.

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