Regional Dynamics of Unemployment in Poland A Convergence Approach

In this paper we approach the regional unemployment dynamics in Poland. Using policy relevant NUTS4 level data from 1999 to 2006, we employ tools typically applied to income convergence analyses to inquire the patterns of unemployment distribution. We apply diverse analytical techniques to seek traces of convergence, including β and σ convergence as well as pass-through analysis. We demonstrate that the unemployment rate distribution is highly stable over time, while only weak “convergence of clubs” is supported by the data and only for the high unemployment regions. Results suggest no support in favour of β-type convergence, i.e. convergence of levels. Even controlling for nation-wide labour market outlooks (conditional convergence) does not provide any support to this hypothesis. Further, regions with both very high and very low unemployment show signs of high persistence and low mobility in the national distribution, while those in the middle tend to demonstrate higher mobility and essentially no persistence of regional unemployment differentials. This diagnosis is confirmed by σ-convergence analysis which indicates no general divergence or convergence patterns. Transitions seem to be slightly more frequent, but at the same time less sustainable for middle range districts, while movements up and down the ladder occur predominantly for the same districts. This methodology allows to define the patterns of local labour market dynamics, pointing to differentiated divergence paths. Importantly, these tendencies prevail despite cohesion financing schemes, which allocate relatively more resources to deprived regions.