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Adjustment to Regional Labour Market Shocks

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  • Kangasharju, Aki
  • Pekkala, Sari

Abstract

This paper analyses regional labour market adjustment in the Finnish provinces during 1976-2000. It investigates the inter-relations of employment, unemployment, labour force participation and migration to see how a change in region-specific and total labour demand is adjusted. The analysis reveals that a region-specific labour demand shocks adjust mainly via participation whereas total shocks are adjusted by unemployment. The region-specific component of labour demand shock has shorter-lived effects on unemployment and participation, but its effect on employment is permanent. Conversely, total shocks leave no permanent effect. Migration is more important in the region-specific case where, after a few years, it gets a large role in the adjustment process.

Suggested Citation

  • Kangasharju, Aki & Pekkala, Sari, 2002. "Adjustment to Regional Labour Market Shocks," Discussion Papers 274, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:274
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    File URL: https://www.doria.fi/handle/10024/148253
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    References listed on IDEAS

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