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Regional Unemployment Clusters: Neighborhood and State Effects in Europe and North America

  • Garcilazo, Jose Enrique

    (OECD)

  • Spiezia, Vincenzo

    (OECD)

Recent nonparametric studies find that the regional distribution of unemployment rates is more dependent on geographic location (neighborhood effects) than on national factors (state effects). These results, however, do not control for stochastic dependency between neighborhood and state effects (joint effects) and do not provide any measure of their relative size. In this paper, we construct a simple measure that is invariant in space and across time and compare state, neighborhood, and joint effects in Europe and North America. We find that neighborhood effects are stronger than state effects in Europe, whereas in North America the size of the joint effect is such that one cannot say which effects prevail.

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Article provided by Southern Regional Science Association in its journal Review of Regional Studies.

Volume (Year): 37 (2007)
Issue (Month): 3 ()
Pages: 282-302

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Handle: RePEc:rre:publsh:v:37:y:2007:i:3:p:282-302
Contact details of provider: Web page: http://www.srsa.org

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  1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, December.
  2. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
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  8. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
  9. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
  10. Quah, Danny, 1993. " Galton's Fallacy and Tests of the Convergence Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 427-43, December.
  11. Enrique López-Bazo & Tomás del Barrio & Manuel Artis, 2002. "The regional distribution of Spanish unemployment: A spatial analysis," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(3), pages 365-389.
  12. Johnson, Paul A., 2000. "A nonparametric analysis of income convergence across the US states," Economics Letters, Elsevier, vol. 69(2), pages 219-223, November.
  13. Puga, Diego & Venables, Anthony J, 1996. "The Spread of Industry: Spatial Agglomeration in Economic Development," CEPR Discussion Papers 1354, C.E.P.R. Discussion Papers.
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  15. Bulli, Sandra, 2001. "Distribution Dynamics and Cross-Country Convergence: A New Approach," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 226-43, May.
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