IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/6569.html
   My bibliography  Save this paper

Regional Unemployment and Human Capital in Transition Economies

Author

Listed:
  • Terrell, Katherine
  • Jurajda, Å tÄ›pán

Abstract

Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labour mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labour and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labour-market institutions, such as guaranteed welfare income raising effective minimum wages.

Suggested Citation

  • Terrell, Katherine & Jurajda, Å tÄ›pán, 2007. "Regional Unemployment and Human Capital in Transition Economies," CEPR Discussion Papers 6569, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6569
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP6569
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

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

    Other versions of this item:

    References listed on IDEAS

    as
    1. Berry, Christopher R. & Glaeser, Edward L., 2005. "Divergence of Human Capital Levels across Cities," Working Paper Series rwp05-057, Harvard University, John F. Kennedy School of Government.
    2. Daniele Checchi & Gianfranco De Simone & Riccardo Faini, 2007. "Skilled Migration, FDI and Human Capital Investment," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1067, Universitá degli Studi di Milano.
    3. Carlo Devillanova, 2004. "Interregional migration and labor market imbalances," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 229-247, June.
    4. Jesse M. Shapiro, 2006. "Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 324-335, May.
    5. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, April.
    6. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    7. Spilimbergo, Antonio & Kwon, Goohoon, 2005. "Russia's Regions: Income Volatility, Labour Mobility and Fiscal Policy," CEPR Discussion Papers 5265, C.E.P.R. Discussion Papers.
    8. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    9. Fidrmuc, Jan, 2004. "Migration and regional adjustment to asymmetric shocks in transition economies," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 230-247, June.
    10. Commander, Simon & Köllő, János, 2004. "The Changing Demand for Skills: Evidence from the Transition," IZA Discussion Papers 1073, Institute of Labor Economics (IZA).
    11. Lange, Fabian & Topel, Robert, 2006. "The Social Value of Education and Human Capital," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 8, pages 459-509, Elsevier.
    12. Edward Ludwig Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
    13. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    14. Giannetti, Mariassunta, 2003. "On the mechanics of migration decisions: skill complementarities and endogenous price differentials," Journal of Development Economics, Elsevier, vol. 71(2), pages 329-349, August.
    15. Paolo Mauro & Antonio Spilimbergo, 1999. "How Do the Skilled and the Unskilled Respond to Regional Shocks?: The Case of Spain," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-1.
    16. Boeri, Tito & Brücker, Herbert, 2001. "Eastern Enlargement and EU-Labour-Markets: Perceptions, Challenges and Opportunities," IZA Discussion Papers 256, Institute of Labor Economics (IZA).
    17. Fabian Bornhorst & Simon Commander, 2006. "Regional unemployment and its persistence in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 269-288, April.
    18. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    19. Ganguli, Ina & Terrell, Katherine, 2006. "Institutions, markets and men's and women's wage inequality: Evidence from Ukraine," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 200-227, June.
    20. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
    21. Lucio R. Pench & Paolo Sestito & Elisabetta Frontini, 1999. "Some unpleasant arithmetics of regional unemployment in the EU. Are there any lessons for EMU?," European Economy - Economic Papers 2008 - 2015 134, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    22. Tito Boeri & Herbert Brücker, 2001. "Eastern Enlargement and EU Labour Markets," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(1), pages 49-68, January.
    23. Daron Acemoglu, 2003. "Patterns of Skill Premia," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 199-230.
    24. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    25. Jeffrey M. Wooldridge, 2003. "Cluster-Sample Methods in Applied Econometrics," American Economic Review, American Economic Association, vol. 93(2), pages 133-138, May.
    26. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    27. Christopher R. Berry & Edward L. Glaeser, 2005. "The divergence of human capital levels across cities," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 407-444, August.
    28. Jolliffe, Dean, 2002. "The Gender Wage Gap in Bulgaria: A Semiparametric Estimation of Discrimination," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 276-295, June.
    29. Uhlig, Harald, 2006. "Regional labor markets, network externalities and migration: The case of German reunification," SFB 649 Discussion Papers 2006-004, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    30. Harald Uhlig, 2006. "Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 383-387, May.
    31. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
    32. Peter, Klara Sabirianova, 2003. "Skill-Biased Transition: The Role of Markets, Institutions, and Technological Change," IZA Discussion Papers 893, Institute of Labor Economics (IZA).
    33. Jurajda, Stepan, 2003. "Gender wage gap and segregation in enterprises and the public sector in late transition countries," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 199-222, June.
    34. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    35. Jolliffe, Dean & Campos, Nauro F., 2005. "Does market liberalisation reduce gender discrimination? Econometric evidence from Hungary, 1986-1998," Labour Economics, Elsevier, vol. 12(1), pages 1-22, February.
    36. Kamil Galuscak & Daniel Munich, 2003. "Microfoundations of the Wage Inflation in the Czech Republic," Working Papers 2003/01, Czech National Bank.
    37. Klara Sabirianova Peter, 2003. "Skill-Biased Transition: The Role of Markets, Institutions, and Technological Change," William Davidson Institute Working Papers Series 2003-616, William Davidson Institute at the University of Michigan.
    38. Huber, Peter, 2004. "Intra-national labor market adjustment in the candidate countries," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 248-264, June.
    39. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
    40. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 111-143, June.
    41. Munich, Daniel & Svejnar, Jan, 2007. "Unemployment in East and West Europe," Labour Economics, Elsevier, vol. 14(4), pages 681-694, August.
    42. Bound, John & Groen, Jeffrey & Kezdi, G.Gabor & Turner, Sarah, 2004. "Trade in university training: cross-state variation in the production and stock of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 143-173.
    43. Giannetti, Mariassunta, 2002. "The effects of integration on regional disparities: Convergence, divergence or both?," European Economic Review, Elsevier, vol. 46(3), pages 539-567, March.
    44. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piotr Ciżkowicz & Michał Kowalczuk & Andrzej Rzońca, 2016. "Heterogeneous determinants of local unemployment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 28(4), pages 487-519, October.
    2. Elizabeth Brainerd, 2010. "Human Development in Eastern Europe and the CIS Since 1990," Human Development Research Papers (2009 to present) HDRP-2010-16, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    3. Mussida Chiara & Zanin Luca, 2019. "Voluntary Mobility of Employees for Better Job Opportunities Given a Temporary Contract: Insights Regarding an Age-Varying Association Between the Two Events," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-27, April.
    4. Georgescu, George, 2014. "International fragmentation of production. Local vulnerabilities and capitalization of heritage values in Romania," MPRA Paper 57255, University Library of Munich, Germany.
    5. Tom Coupé & Hannah Vakhitova, 2013. "Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Partner Countries. Country report: Ukraine," CASE Network Studies and Analyses 0464, CASE-Center for Social and Economic Research.
    6. Barbara Gebicka, 2010. "College Degree Supply and Occupational Allocation of Graduates the Case of the Czech Republic," CERGE-EI Working Papers wp407, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Štěpán Jurajda & Katherine Terrell, 2009. "Regional unemployment and human capital in transition economies1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 241-274, April.
    2. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    3. Fu, Yuming & Gabriel, Stuart A., 2012. "Labor migration, human capital agglomeration and regional development in China," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 473-484.
    4. Südekum, Jens, 2008. "Convergence of the skill composition across German regions," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 148-159, March.
    5. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    6. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
    7. Winters, John V., 2011. "Human capital, higher education institutions, and quality of life," Regional Science and Urban Economics, Elsevier, vol. 41(5), pages 446-454, September.
    8. John V. Winters, 2011. "Why Are Smart Cities Growing? Who Moves And Who Stays," Journal of Regional Science, Wiley Blackwell, vol. 51(2), pages 253-270, May.
    9. Winters, John V, 2010. "Human Capital and Population Growth in Non-Metropolitan U.S. Counties: The Importance of College Student Migration," MPRA Paper 25592, University Library of Munich, Germany.
    10. Jaison Abel & Todd Gabe, 2011. "Human Capital and Economic Activity in Urban America," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1079-1090.
    11. Peter McHenry, 2014. "The Geographic Distribution Of Human Capital: Measurement Of Contributing Mechanisms," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 215-248, March.
    12. Aurélie LALANNE & Guillaume POUYANNE, 2012. "Ten years of metropolization in economics: a bibliometric approach (In French)," Cahiers du GREThA (2007-2019) 2012-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    13. Viktor A. Venhorst, 2017. "Human capital spillovers in Dutch cities: consumption or productivity?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(3), pages 793-817, November.
    14. Andrea Bonaccorsi & Daniele Biancardi & Mabel Sanchez Barrioluengo & Federico Biagi, 2019. "Study on Higher Education Institutions and Local Development," JRC Research Reports JRC117272, Joint Research Centre.
    15. Casey Dougal & Christopher A. Parsons & Sheridan Titman, 2014. "Urban Vibrancy and Corporate Growth," NBER Working Papers 20350, National Bureau of Economic Research, Inc.
    16. Edward L. Glaeser & Giacomo A.M. Ponzetto & Kristina Tobio, 2010. "The Varieties of Regional Change," Working Papers 472, Barcelona School of Economics.
    17. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    18. Edward L. Glaeser & Giacomo A. M. Ponzetto & Kristina Tobio, 2014. "Cities, Skills and Regional Change," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 7-43, January.
    19. Adelheid Holl, 2018. "Local employment growth patterns and the Great Recession: The case of Spain," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 837-863, September.
    20. Südekum Jens, 2010. "Human Capital Externalities and Growth of High- and Low-Skilled Jobs," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(1), pages 92-114, February.

    More about this item

    Keywords

    Complementarities; Czech republic; Human capital; Hungary; Labour mobility; Regional labour markets; Romania; Spillovers; Transition economies; Ukraine;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J0 - Labor and Demographic Economics - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    Statistics

    Access and download statistics

    Corrections

    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:cpr:ceprdp:6569. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.