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Unemployment in European Regions: Structural Problems vs. the Eurozone Hypothesis

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Author Info

  • Andersson, Åke E.

    ()
    (Jönköping International Business School)

  • Andersson , David Emanuel

    ()
    (Nottingham University Business School China)

  • Hårsman, Björn

    ()
    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Daghbashyan, Zara

    ()
    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

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    Abstract

    Unemployment rates differ dramatically across European regions. This paper analyses these differences by integrating institutional and spatial perspectives into a unified theoretical framework. An econometric model is then used to analyse differences among European NUTS2 regions. The results of random-effects models indicate that there are four key factors that explain regional unemployment rates. Flexible labour market regulations and above-average levels of interpersonal trust are institutional factors that reduce unemployment. Accessibility factors such as inter-regional transport connectivity and local access to skilled workers have similarly substantial effects. Whether a region belongs to the Eurozone or not seems to be less important.

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    Bibliographic Info

    Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 355.

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    Length: 37 pages
    Date of creation: 26 Mar 2014
    Date of revision:
    Handle: RePEc:hhs:cesisp:0355

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    Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
    Phone: +46 8 790 95 63
    Web page: http://www.infra.kth.se/cesis/
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    Keywords: unemployment; Euro; institutions; accessibility;

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    1. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2011. "Human Capital and Regional Development," NBER Working Papers 17158, National Bureau of Economic Research, Inc.
    2. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
    3. Laurence M. Ball & Daniel Leigh & Prakash Loungani, 2013. "Okun's Law: Fit at Fifty?," NBER Working Papers 18668, National Bureau of Economic Research, Inc.
    4. Börje Johansson & Johan Klaesson & Michael Olsson, 2002. "Time distances and labor market integration," Papers in Regional Science, Springer, vol. 81(3), pages 305-327.
    5. Ian R. Gordon & Paul C. Cheshire, 1998. "original: Territorial competition: Some lessons for policy," The Annals of Regional Science, Springer, vol. 32(3), pages 321-346.
    6. Phelps, Edmund S., 2006. "Macroeconomics for a Modern Economy," Nobel Prize in Economics documents 2006-4, Nobel Prize Committee.
    7. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 677-716, 06.
    8. James E. Rauch, 1991. "Productivity Gains From Geographic Concentration of human Capital: Evidence From the Cities," NBER Working Papers 3905, National Bureau of Economic Research, Inc.
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