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On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK

  • Michelle Gilmartin
  • Dimitris Korobilis

This paper considers the determinants of regional disparities in unemployment rates for the UK regions at NUTS-II level. We use a mixture panel data model to describe unemployment differentials between heterogeneous groups of regions. The results indicate the existence of two clusters of regions in the UK economy, characterised by high and low unemployment rates respectively. A major source of heterogeneity seems to be caused by the varying (between the two clusters) effect of the share of employment in the services sector, and we trace its origin to the fact that the "high unemployment" cluster is characterised by a higher degree of urbanization.

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Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 59 (2012)
Issue (Month): 2 (05)
Pages: 179-195

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Handle: RePEc:bla:scotjp:v:59:y:2012:i:2:p:179-195
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  1. Mark Partridge & Dan Rickman, 1997. "The Dispersion of US State Unemployment Rates: The Role of Market and Non-market Equilibrium Factors," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 593-606.
  2. Enrique Lopez-Bazo & Tomas Del Barrio & Manuel Artis, 2005. "Geographical distribution of unemployment in Spain," Regional Studies, Taylor & Francis Journals, vol. 39(3), pages 305-318.
  3. Henry Overman & Diego Puga, 1999. "Unemployment Clusters Across European Regions and Countries," CEP Discussion Papers dp0434, Centre for Economic Performance, LSE.
  4. Costas Megir & Danny Quah, 1996. "Regional Convergence Clusters Across Europe," CEP Discussion Papers dp0274, Centre for Economic Performance, LSE.
  5. Maria Francesca Cracolici & Miranda Cuffaro & Peter Nijkamp, 2007. "Geographical Distribution of Unemployment: An Analysis of Provincial Differences in Italy," Growth and Change, Wiley Blackwell, vol. 38(4), pages 649-670.
  6. Fabio Canova, 1997. "Testing for convergence clubs in income per-capita: A predictive density approach," Economics Working Papers 404, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
  7. Fruhwirth-Schnatter, Sylvia & Kaufmann, Sylvia, 2008. "Model-Based Clustering of Multiple Time Series," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 78-89, January.
  8. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
  9. Taylor, Jim & Bradley, Steve, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Wiley Blackwell, vol. 50(2), pages 221-45.
  10. Paap, Richard & Franses, Philip Hans & van Dijk, Dick, 2005. "Does Africa grow slower than Asia, Latin America and the Middle East? Evidence from a new data-based classification method," Journal of Development Economics, Elsevier, vol. 77(2), pages 553-570, August.
  11. Elhorst, J. Paul, 2001. "The mystery of regional unemployment differentials : a survey of theoretical and empirical explanations," Research Report 00C06, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  12. Theodore M. Crone, 2005. "An Alternative Definition of Economic Regions in the United States Based on Similarities in State Business Cycles," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 617-626, November.
  13. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
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