Regional disparities in a small country? An analysis of regional unemployment and participation differentials in the Netherlands from 1975 to 2003
The existence of regional support programs presumes that labour markets in the Netherlands do not clear at the national, but at some local level. From a general equilibrium perspective, it is far from straightforward to identify the regional dimension of labour markets. This study argues that the size and persistence of regional unemployment and participation differentials are an appropriate indicator. We analyse regional unemployment and participation in the Netherlands from 1975 until 2003. Empirically, differences in inactivity do not seem to be a reliable indicator of the regional component of labour markets. Both from an international perspective, and in comparison to variation of labour market conditions over the business cycle, the regional dimension of labour markets appears to be small. However, it is relatively large for women, youths and the lower educated, which are the least mobile groups. It would be efficient to aim regional labour market programs at these groups, if such programs are desirable at all.
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