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Commuting effects in Okun's Law among British areas: Evidence from spatial panel econometrics

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  • Silvia Palombi
  • Roger Perman
  • Christophe Tavéra

Abstract

This paper examines Okun's Law using a spatial panel approach on NUTS 3 data for Great Britain over the period 1985–2011. The basic specification used as a starting point for the spatial analysis is the relationship between real output growth and unemployment rate changes. This is extended to incorporate spatial lags, to test for the presence of commuting effects, and to accommodate spatial residuals dependence. We estimate various spatial panel models, controlling for heterogeneity across areas, and find consistent evidence of a significant Okun's coefficient. Results also show that spillover effects from labour mobility and interregional linkages matter and have important implications for the validity of the empirical law.
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  • Silvia Palombi & Roger Perman & Christophe Tavéra, 2017. "Commuting effects in Okun's Law among British areas: Evidence from spatial panel econometrics," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 191-209, March.
    • Handle: RePEc:bla:presci:v:96:y:2017:i:1:p:191-209
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    3. Bande, Roberto & Martín-Román, Ángel, 2018. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 41, pages 137-165.
    4. Luigi Bonaventura & Roberto Cellini & Mario Sambataro, 2020. "Gender differences in the Okun's law across the Italian regions," Economics Bulletin, AccessEcon, vol. 40(4), pages 2780-2789.
    5. Shuo Wang & Junnian Song & Xian’En Wang & Wei Yang, 2019. "The Spatial and Temporal Research on the Coupling and Coordinated Relationship between Social Economy and Energy Environment in the Belt and Road Initiatives," Sustainability, MDPI, vol. 11(2), pages 1-18, January.
    6. Martin Boďa & Mariana Považanová, 2020. "Formal and statistical aspects of estimating Okun's law at a regional level," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 1113-1136, August.
    7. Buendía Azorín, José Daniel & Sánchez de la Vega, María del Mar, 2017. "Output growth thresholds for the creation of employment and the reduction of unemployment: A spatial analysis with panel data from the Spanish provinces, 2000–2011," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 42-49.
    8. Ousama Ben-Salha & Zouhair Mrabet, 2019. "Is Economic Growth Really Jobless? Empirical Evidence from North Africa," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(4), pages 598-624, December.

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