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Regional Unemployment and Human Capital in Transition Economies

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  • 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
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    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.

    More about this item

    Keywords

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    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

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