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Regional Labor Market Performance in Europe

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  • Helmut Herwartz
  • Annekatrin Niebuhr

Abstract

The labor market effects of the recent financial and economic crisis are rather heterogeneous across countries and regions. Such differences in labor market performance among industrialized countries are an issue of ongoing research. The objective of this article is to analyze labor market disparities among European regions and to provide evidence on the factors behind these differences. Whereas previous research focused on the effects of national labor market institutions, we also take structural characteristics of regions into account and investigate differences in labor demand responsiveness and their potential determinants. The data set covers the Nomenclature des unités territoriales statistiques 2 regions in the EU15 for the period 1980 to 2008. We employ an error correction model that is combined with spatial residual correlation. Our findings point to substantially distinct wage and output elasticities of employment among European countries and regions. Moreover, the rate of adjustment to disequilibrium is subject to significant variation across units of observation. There is robust evidence that labor market institutions affect the adjustment speed of regional labor markets and the wage elasticity of employment. Moreover, the findings suggest that some characteristics of regional labor markets matter as well. However, corresponding results are less robust compared with the evidence on labor market institutions.

Suggested Citation

  • Helmut Herwartz & Annekatrin Niebuhr, 2017. "Regional Labor Market Performance in Europe," International Regional Science Review, , vol. 40(3), pages 270-296, May.
    • Handle: RePEc:sae:inrsre:v:40:y:2017:i:3:p:270-296
    DOI: 10.1177/0160017615603577
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    Cited by:

    1. de Graaff, Thomas & Ozgen, Ceren & Roth, Duncan H.W., 2018. "Varying Youth Cohort Effects on Regional Labour Market Outcomes in Germany," IZA Discussion Papers 11932, Institute of Labor Economics (IZA).
    2. Francisco Javier Escribá-Pérez & María José Murgui-García, 2018. "Technology catching-up and regulation in European regions," Journal of Productivity Analysis, Springer, vol. 49(1), pages 95-109, February.

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