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Unemployment in European Regions: Structural Problems vs. the Eurozone Hypothesis

  • Andersson, Åke E.

    ()

    (Jönköping International Business School)

  • Andersson , David Emanuel

    ()

    (Nottingham University Business School China)

  • Hårsman, Björn

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Daghbashyan, Zara

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Unemployment rates differ dramatically across European regions. This paper analyses these differences by integrating institutional and spatial perspectives into a unified theoretical framework. An econometric model is then used to analyse differences among European NUTS2 regions. The results of random-effects models indicate that there are four key factors that explain regional unemployment rates. Flexible labour market regulations and above-average levels of interpersonal trust are institutional factors that reduce unemployment. Accessibility factors such as inter-regional transport connectivity and local access to skilled workers have similarly substantial effects. Whether a region belongs to the Eurozone or not seems to be less important.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 355.

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Length: 37 pages
Date of creation: 26 Mar 2014
Date of revision:
Publication status: Published as Andersson, Åke E., David Emanuel Andersson, Björn Hårsman and Zara Daghbashyan, 'Unemployment in European Regions: Structural Problems vs. the Eurozone Hypothesis' in Journal of Economic Geography, 2015.
Handle: RePEc:hhs:cesisp:0355
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/

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  1. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2011. "Human Capital and Regional Development," NBER Working Papers 17158, National Bureau of Economic Research, Inc.
  2. James E. Rauch, 1991. "Productivity Gains From Geographic Concentration of human Capital: Evidence From the Cities," NBER Working Papers 3905, National Bureau of Economic Research, Inc.
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  4. Börje Johansson & Johan Klaesson & Michael Olsson, 2002. "Time distances and labor market integration," Papers in Regional Science, Springer, vol. 81(3), pages 305-327.
  5. Guido Tabellini, 2006. "Culture and institutions: economic development in the regions of Europe," Levine's Working Paper Archive 321307000000000241, David K. Levine.
  6. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
  7. Ian R. Gordon & Paul C. Cheshire, 1998. "original: Territorial competition: Some lessons for policy," The Annals of Regional Science, Springer, vol. 32(3), pages 321-346.
  8. Laurence M. Ball & Daniel Leigh & Prakash Loungani, 2013. "Okun's Law: Fit at Fifty?," NBER Working Papers 18668, National Bureau of Economic Research, Inc.
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