The Impact of the Institutions on Regional Unemployment Disparities

Abstract

The main aim of this paper is to study the European regional disparities in the labour market, considering the regional productive structures and some regional institutional variables. It is widely known that one of the EU's most important stylized facts is the regional disparities among regions. Such differences are related mostly to the income per capita and to the labour market captured through the unemployment rates. In a recent paper (Amendola, Caroleo Coppola, 2004) we analyzed the economic structure of the EU's regions through some proxies of the productive assets and of the labour markets. In this paper we estimate a panel data model where the dependent variable is the regional unemployment rate and the independent variables are some variables related to the productive structure and some regional institutional aspects. The results we obtain confirm that the institutional variables, such as the centralization of wage bargaining, the decentralization of public expenditure and the bureaucracy level, have an important impact on the unemployment rates.