Nation size and unemployment
Throughout the world, strong dispersions of both regional and national unemployment rates can be observed. The economic theory has developed various explanations on how this differences occur. Corresponding models mainly aim at institutional and political framework, insider effects, efficiency wages, collective bargaining and cyclical effects. However, the size of economies has received little attention in this discussion. In this paper, we will show that there is indeed a strong link between size and unemployment. Using data from 37 countries, 15 continents and trade areas as well as 496 federal states, we will demonstrate that larger economic regions tend to have higher unemployment rates. Subsequently, we show that this correlation is strongly determined by the degree of centralization of countries. Based on these findings, we develop a model that explains regional and national unemployment using size and centralization. We will point out that centralization parabolas can be derived for each country. These curves are strongly influenced by the size of economies in a way that different sizes lead to a shift of the parabolas. As we will demonstrate, country-specific parabolas explain the strong dispersion of unemployment rates quite accurately.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0931) 31-2901
Fax: (0931) 31-2101
Web page: http://www.vwl.uni-wuerzburg.de/lehrstuehle/vwl4/startseite/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ricardo J. Caballero & Mohamad L. Hammour, 2001.
"Institutions, Restructuring and Macroeconomic Performance,"
DELTA Working Papers
2001-03, DELTA (Ecole normale supérieure).
- Ricardo J. Caballero & Mohamad L. Hammour, 2000. "Institutions, Restructuring, and Macroeconomic Performance," NBER Working Papers 7720, National Bureau of Economic Research, Inc.
- Lorenzo Forni, 2004. "Centralization of wage bargaining and the unemployment rate: revisiting the hump-shape hypothesis," Temi di discussione (Economic working papers) 492, Bank of Italy, Economic Research and International Relations Area.
- John Haltiwanger & Stefano Scarpetta & Helena Schweiger, 2008.
"Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations,"
NBER Working Papers
13920, National Bureau of Economic Research, Inc.
- Haltiwanger, John C. & Scarpetta, Stefano & Schweiger, Helena, 2006. "Assessing Job Flows across Countries: The Role of Industry, Firm Size and Regulations," IZA Discussion Papers 2450, Institute for the Study of Labor (IZA).
- Haltiwanger, John & Scarpetta, Stefano & Schweiger, Helena, 2006. "Assessing job flows across countries : the role of industry, firm size, and regulations," Policy Research Working Paper Series 4070, The World Bank.
- Blanchard, Olivier & Wolfers, Justin, 2000.
"The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence,"
Royal Economic Society, vol. 110(462), pages C1-33, March.
- Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
- Assar Lindbeck, 1993. "Unemployment and Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121751, June.
- Franz Traxler, 2003. "Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 1-27, 03.
When requesting a correction, please mention this item's handle: RePEc:zbw:wuewwb:116. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.