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Globalization and Regional Unemployment Divergence in the EU Countries

  • Paolo Epifani

The cultural and geographic proximity between two regions otherwise very distant (both in terms of factor endowment and specialization pattern) makes the wage perceived as fair in the peripheral region dependent on the wage prevailing in the core region. As a consequence, the peripheral wage is too high and unemployment results. This problem is exacerbated by the greater international division of labor brought about by globalization, which increases the core-periphery labor productivity gap and so brings about a surge in unemployment in the periphery. Hence, this paper challenges, in a regional context, the view that a finer division of labor reduces unemployment, and offers an explanation of the growing differentials in the regional rates of unemployment observed in many EU countries in the last decades.

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Paper provided by Cattaneo University (LIUC) in its series LIUC Papers in Economics with number 59.

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Length: 36 pages
Date of creation: Dec 1998
Date of revision:
Handle: RePEc:liu:liucec:59
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