Asymmetric responses to shocks: the role of structural change on resilience of the Euro area regions

Abstract

ABSTRACT Building on the notion of adaptive resilience, and sourcing from the Eurostat regional database on 150 NUTS 2 EURO regions over the period 1998–2019, we show that both industrial mix and regional specialization played a key role in the asymmetric reaction of European regional labor markets to the 2008 crisis and the following 2011–12 sovereign debt crisis. Standard and spatial econometric analyses confirm that the pre-crisis structural composition of regional labor markets resulted in the speed of the post-crisis recovery. Recovery was further affected by the kind of structural change each region experienced after the crisis, depending on their different capacity to host knowledge intensive and hi-tech activities. Based on this evidence, national austerity policies may have exacerbated regional divergence within and between EU countries.