IDEAS home Printed from
   My bibliography  Save this article

Inequalities, employment and income convergence in Europe: evidence from regional data


  • James Galbraith
  • Jose Enrique Garcilazo


This paper explores the relationship between pay inequality and unemployment rates for 187 European Regions from 1984-2003. We measure inequality within the regions between 16 industrial sectors in each region - and also between the regions: thus, the inequality measures are nested. Our model of unemployment employs a panel structure that permits us to separate regional, national and continental influences on European unemployment. This allows us to test whether a tradeoff exists between cohesion and competitiveness. We find no evidence of this tradeoff; instead, lower pay inequality is generally associated with a lower regional unemployment rate. We find strong country effects lowering unemployment (relative to the model) in relatively smaller countries such as Ireland, Austria, Portugal and the Netherlands; on the other hand unemployment is high, relative to the model, in Spain and Poland. Time effects reveal the effects of European macro-environment on regional unemployment. We find an employment penalty associated with the Maastricht Treaty (1992) and its implementation of around four percentage points, lasting until 1998, when a general reduction in unemployment appears to coincide with the arrival of the euro. Unfortunately, the pattern is again reversed in 2000, coinciding with the implementation of the Lisbon Treaty. The analysis has grave implications for the consequences of the crisis of 2008 and after, although data on this period will not become available for some time.

Suggested Citation

  • James Galbraith & Jose Enrique Garcilazo, 2010. "Inequalities, employment and income convergence in Europe: evidence from regional data," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(3), pages 359-377.
  • Handle: RePEc:taf:irapec:v:24:y:2010:i:3:p:359-377
    DOI: 10.1080/02692171003701594

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Europe; unemployment; regional inequality;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:irapec:v:24:y:2010:i:3:p:359-377. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.