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Regional Unemployment and Productivity in Europe and the US

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Roberto Basile ()
Luca De Benedictis ()

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Abstract

The existence and persistence of large spatial disparities in un-employment within national economies is a central issue in regional economics. Previous empirical analyses have largely disregarded the role of fundamentals. On the contrary in this paper we explore the link between labour productivity, international trade and regional un-employment differentials. We base our empirical analysis on the predictions of a simple General Oligopolistic Equilibrium effciency-wage trade model. Using semi parametric regression methods, controlling for industry-mix and labour force participation, we give evidence of a non linear negative relationship between labour productivity and regional unemployment, in the cases of European regions. Instead, no significant relationships between these variables have been found for the United States. Keywords: Productivity, Regional Unemployment, Oligopoly, Non parametrics. JEL Classification: C14, D50, F12, F16, J41, L13, R10.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p38.

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Date of creation: Aug 2004
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Handle: RePEc:wiw:wiwrsa:ersa04p38

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References listed on IDEAS
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  1. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Blackwell Publishing, vol. 26(4), pages 457-470, 04. [Downloadable!] (restricted)
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  2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  3. Niebuhr, Annekatrin, 2002. "Spatial Dependence of Regional Unemployment in the European Union," Discussion Paper Series 26147, Hamburg Institute of International Economics. [Downloadable!]
  4. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June. [Downloadable!] (restricted)
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  5. Copeland, B.R., 1988. "Efficiency Wages In A Richardian Model Of International Trade," UBC Departmental Archives 88-31, UBC Department of Economics.
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  6. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December. [Downloadable!] (restricted)
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  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
  8. Pench, L.R. & Sestito, P. & Frontini, E., 1999. "Some Unpleasant Arithmetics of Regional Unemployment in the EU. Are there any lessons for EMU?," European Economy - Economic Papers 134, Commission of the EC, Directorate-General for Economic and Financial Affairs (DG ECFIN).
  9. Hoon, Hian Teck, 2001. "Adjustment of wages and equilibrium unemployment in a Ricardian global economy," Journal of International Economics, Elsevier, vol. 54(1), pages 193-209, June. [Downloadable!] (restricted)
  10. Olivier Blanchard & Pedro Portugal, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March. [Downloadable!] (restricted)
  11. Taylor, Jim & Bradley, Steve, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Blackwell Publishing, vol. 50(2), pages 221-45.
  12. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November. [Downloadable!] (restricted)
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  13. Basile, Roberto & Padoa Schioppa, Fiorella Kostoris, 2002. "Unemployment Dynamics of the 'Mezzogiornos of Europe': Lessons for the Mezzogiorno of Italy," CEPR Discussion Papers 3594, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor and Francis Journals, vol. 31(3), pages 237-252, May. [Downloadable!] (restricted)
  15. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
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  16. Olivier Blanchard & Lawrence F. Katz, 1999. "Wage Dynamics: Reconciling Theory and Evidence," American Economic Review, American Economic Association, vol. 89(2), pages 69-74, May. [Downloadable!] (restricted)
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  17. repec:rus:hseeco:122439 is not listed on IDEAS
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  1. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis. [Downloadable!]
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