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Okun’S Law In The French Regions: A Cross-Regional Comparison

Author

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  • Marie-Estelle Binet

    (University of Rennes 1 - CREM (UMR 6211 CNRS))

  • François Facchini

    (Centre d'Economie de la Sorbonne, University of Paris 1)

Abstract

This article tackles one central issue in the regional science literature: the persistence of regional disparities in unemployment within national economies. Our approach is original as Okun’s coefficients are estimated for each of the 22 administrative French regions over the period 1990–2008, taking into account cross-regional disparities in a panel data specification. Estimates show that the coefficients exhibit regional differences. Indeed, Okun’s law is confirmed in fourteen regions, although it does not hold in the other eight regions. Finally, region-specific factors that explain the results that are not significant are identified, and policies to reduce unemployment in French regions are examined.

Suggested Citation

  • Marie-Estelle Binet & François Facchini, 2012. "Okun’S Law In The French Regions: A Cross-Regional Comparison," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201222, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  • Handle: RePEc:tut:cremwp:201222
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    File URL: https://crem-doc.univ-rennes1.fr/wp/2012/201222.pdf
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    References listed on IDEAS

    as
    1. Nicholas Apergis & Anthony Rezitis, 2003. "An examination of Okun's law: evidence from regional areas in Greece," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1147-1151.
    2. Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-336, May.
    3. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers 145, University of Rome La Sapienza, Department of Public Economics.
    4. David Shepherd & Robert Dixon, 2002. "The Relationship Between Regional and National Unemployment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 469-480.
    5. Roberto Bande & Melchor Fernandez & Victor Montuenga, 2007. "Regional Disparities in the Unemployment Rate: The Role of the Wage-setting Mechanism in Spain, 1987-92," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 235-251.
    6. Dimitris Christopoulos, 2004. "The relationship between output and unemployment: Evidence from Greek regions," Papers in Regional Science, Springer;Regional Science Association International, vol. 83(3), pages 611-620, July.
    7. Adolfo Maza & José Villaverde, 2007. "Okun's law in the Spanish regions," Economics Bulletin, AccessEcon, vol. 18(5), pages 1-11.
    8. Villaverde, José & Maza, Adolfo, 2009. "The robustness of Okun's law in Spain, 1980-2004: Regional evidence," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 289-297.
    9. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
    10. Moosa, Imad A., 1997. "A Cross-Country Comparison of Okun's Coefficient," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 335-356, June.
    11. repec:ebl:ecbull:v:18:y:2007:i:5:p:1-11 is not listed on IDEAS
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    Cited by:

    1. alamro, Hassan & Al-dalaien, Qusay, 2014. "Modeling the relationship between GDP and unemployment for Okun’s law specific to Jordan," MPRA Paper 55302, University Library of Munich, Germany.
    2. Marie-Estelle Binet & François Facchini, 2015. "The factors determining firm start-ups in French regions and the heterogeneity of regional labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 251-268, January.
    3. Guisinger, Amy Y. & Hernandez-Murillo, Ruben & Owyang, Michael T. & Sinclair, Tara M., 2018. "A state-level analysis of Okun's law," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 239-248.
    4. Porras, María Sylvina & Martín-Román, Ángel L., 2017. "Self-employment and Okun’s Law relationship: the Spanish case," GLO Discussion Paper Series 157, Global Labor Organization (GLO).
    5. Ryan Herzog, 2013. "Using state level employment thresholds to explain Okun’s Law," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-26, December.
    6. Rui Pereira, 2014. "Okun’s law, asymmetries and regional spillovers: evidence from Virginia metropolitan statistical areas and the District of Columbia," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 583-595, March.
    7. Bonaventura, Luigi & Cellini, Roberto & Sambataro, Mario, 2018. "Gender differences in Okun's law across the Italian regions," MPRA Paper 87557, University Library of Munich, Germany.
    8. repec:rfe:zbefri:v:35:y:2017:i:1:p:13-44 is not listed on IDEAS
    9. Ryan W Herzog, 2013. "An Analysis of Okun's Law, the Natural Rate, and Voting Preferences for the 50 States," Economics Bulletin, AccessEcon, vol. 33(4), pages 2504-2517.
    10. Miquel Clar-Lopez & Jordi López-Tamayo & Raúl Ramos, 2014. "Unemployment forecasts, time varying coefficient models and the Okun’s law in Spanish regions," Economics and Business Letters, Oviedo University Press, vol. 3(4), pages 247-262.
    11. Luz A. Flórez & Karen L. Pulido-Mahecha & Mario A. Ramos-Veloza, 2018. "Okun´s law in Colombia: a non-linear cointegration," Borradores de Economia 1039, Banco de la Republica de Colombia.
    12. Marie-Estelle Binet & François Facchini, 2013. "Determinants of Entrepreneurship in French Regions: The Role of Spatial Heterogeneity," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201312, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    13. Celia Melguizo, 2017. "An analysis of Okun’s law for the Spanish provinces," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 37(1), pages 59-90, February.
    14. Bande, Roberto & Martín-Román, Ángel L., 2017. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," MPRA Paper 79833, University Library of Munich, Germany.
    15. repec:eee:regeco:v:67:y:2017:i:c:p:42-49 is not listed on IDEAS
    16. Celia Melguizo Cháfer, 2015. "“An analysis of the Okun’s law for the Spanish provinces”," IREA Working Papers 201501, University of Barcelona, Research Institute of Applied Economics, revised Jan 2015.
    17. Vakulenko, Elena, 2015. "Analysis of the relationship between regional labour markets in Russia using Okun’s model," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 40(4), pages 28-48.
    18. Celia Melguizo Cháfer, 2015. "“An analysis of the Okun’s law for the Spanish provinces”," AQR Working Papers 201501, University of Barcelona, Regional Quantitative Analysis Group, revised Jan 2015.

    More about this item

    Keywords

    Okun’s law; regional labour markets; panel data;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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