Regional Differences In Unemployment Research Articles

Unemployment Rate Convergence in the Case of Turkey: A Regional Analysis within the Scope of Dollarization and Real Wage

The unemployment rate is a fundamental variable in the socioeconomic comparison between regions. Hence, it is included in the focus of regional economic policies. Regional policy sets are frequently used to eliminate regional unemployment differences. This situation raises discussions about the efficiency of the employment policies and questions whether regional unemployment rates tend to converge to national averages. Especially in economies with regional development differences and the labor market does not exhibit a homogeneous structure, the regional analysis of unemployment rates is becoming more critical. This paper analyses the convergence of unemployment rates with the panel data set, which includes 26 regions of Turkey and the period 2004-2020. It is investigated if regional macroeconomic interactions in Turkey make the labor market homogeneous. Besides, the effects of dollarization and real wage on the unemployment rate change are questioned. The study's findings indicate the presence of deterministic and stochastic β convergence. According to the unconditional and conditional β convergence analysis, the change in the unemployment rate depends on the initial value of the unemployment rate. The findings also show that if dollarization and real wage growth increase, unemployment rate growth also increases. σ convergence analysis also confirms the presence of unemployment rate convergence.

The labor market in Switzerland, 2000–2018

Switzerland is a small country with rich cultural and geographic diversity. The Swiss unemployment rate is low, at around 4%. The rate has remained at that level since the year 2000, despite a massive increase in the foreign labor force, the Great Recession, and a currency appreciation shock, demonstrating the Swiss labor market's impressive resiliency. However, challenges do exist, particularly related to earnings and employment gaps between foreign and native workers, as well as a narrowing but persistent gender pay gap. Additionally, regional differences in unemployment are significant.

Temporary employment, work stress and mental health before and after the Spanish economic recession.

This paper analyses the effects of temporary employment on work stress and mental health before (2006/2007) and during the economic recession (2011/2012), and examines whether the economic recession worsened these two health outcomes. To control for selection bias, propensity scores (PS) are computed separately for salaried men and women using microdata from two cross-sectional health surveys in Spain, considering temporary (treatment group) versus permanent employment (control group). Next, we use difference-in-difference estimators stratifying by age, education level, and regional unemployment differences using PS as weights. Our results indicate that salaried worker with a temporary labour contract tends to have similar levels of high work stress and poorer mental health (only for men) than permanent ones for both periods. The economic recession does not appear to worsen both outcomes. However, when stratifying the sample, the economic recession is responsible for increasing stress among older temporary workers and male university graduates, without affecting women. Regarding mental health, we only find evidence of a negative impact of the economic recession on male temporary workers with university education. The economic recession has not affected poor mental health, but it has accentuated the adverse effects of work stress among some specific subgroups of male workers. These subgroups require specific preventive and support actions as the Spanish firms have not substantially changed their hiring practices after the recession.

Has the Economic Crisis Worsened the Work-Related Stress and Mental Health of Temporary Workers in Spain?

This paper analyses the causal effects of temporary employment on work-related stress and mental health before (2006/07) and during the economic crisis (2011/12) and examines whether the economic recession worsened these two health outcomes. To control for selection bias, propensity scores (PS) are computed separately for men and women using microdata from two cross-sectional surveys, considering temporary (treatment group) versus permanent employment (control group). Next, we use difference-in-differences estimators stratifying by age, education level, and regional unemployment differences using PS as weights. Our results indicate that a male salaried worker with a temporary labour contract tends to have lower levels of work-related stress in the pre-crisis period, but not for women. The stratification analysis shows lower work-related stress levels among older male adults, workers with a high education level, and employees in regions with high unemployment rates. The economic crisis is responsible for increasing stress only among older temporary workers and male university graduates, without affecting women. We also see evidence of a positive link between temporary employment and poor mental health in both periods, although only for men. We neither find significant impacts for our sample of men or women, nor for most of our population subgroups with the exception male workers with a university degree.

The labor market in Switzerland, 2000–2016

Switzerland is a small country with rich cultural and geographic diversity. The Swiss unemployment rate is low, at only about half the OECD average. The rate has remained at that level since the year 2000, despite a massive increase in the foreign labor force, the Great Recession, and a currency appreciation shock, demonstrating the Swiss labor market’s impressive resiliency. However, challenges do exist, particularly related to earnings and employment gaps among foreign and native workers, as well as a narrowing but persistent gender pay gap. Additionally, regional differences in unemployment are significant.

Public employment policies and regional unemployment differences

This paper contributes to the existing literature on public employment showing that the wage setting policy of the public sector is an important determinant of private employment and unemployment. I look at the case of geographically homogeneous wages across regions with different productivity, and show that public employment generates a crowding out effect against private employment. This effect is larger the larger is the public sector share of total employment. However, when the government pays wages according to local productivity the crowing out effect vanishes. I present a two region two sector model based on Pissarides (2000) heterogeneous search and matching model where vacancies are posted by the private and the public sector as in Quadrini and Trigari (2007), Gomes (Forthcoming) and Boeing-Reicher et al. (2016). I calibrate the model to the Italian labor market and show that the uniform wage setting policy adopted by the central government, in the presence of productivity unbalance across regions, is responsible for up to 33% of the unemployment gap between the North and South. Moreover, I show that the geographical homogeneous wage setting is responsible for a stronger and geographically highly asymmetric response of unemployment to aggregate productivity shocks. I also allow for migration from one region to the other and find that it has only a very limited mitigating role in reducing this gap. Policy experiments suggest that reducing the size of public employment reduces unemployment in lower productive regions while allowing for regional wage setting in the public sector almost eliminates the unemployment differential.

Vybrané aspekty regionální diferenciace nezaměstnanosti na Slovensku

Relatively higher unemployment rate in compare with other European countries is a persisting problem of Slovak republic, and distribution of unemployment is significantly differentiated in space. This paper aims to research on selected aspects of regional differences in unemployment in Slovakia, such as gender, age and education level, and to link local unemployment rates to wage levels. Analysis is used as a key method, focusing on statistical data of 2015 registered unemployment from the Central Office of Labour, Social Affairs and Family. Among the key findings, our research confirms growing rates of unemployment on axis west-east in general, with higher internal differences in regions with higher rates. While gender differences are not significant, education shows as an important factor for labour market position, and we confirm high youth unemployment rate in some regions. In the last part of the paper, we relate local unemployment rates with wage levels to show the impact of unemployment on income level.

Public Employment Policies and Regional Unemployment Differences

This paper contributes to the existing literature on public employment showing that the wage setting policy of the public sector can be an important determinant of private employment and unemployment. I look at the case of geographically homogeneous wages across regions with different private sector productivity, and show that public employment generates a crowding out effect against private employment. This effect is larger the larger is the public sector share of total employment.I present a two region two sector model based on Pissarides (2000) heterogeneous search and matching model where vacancies are posted by the private and the public sector as in Quadrini and Trigari (2007) and Gomes (2014). I calibrate the model to the Italian labor market and show that the uniform wage setting policy adopted by the central government, in the presence of productivity unbalance across regions, is responsible for up to 40% of the unemployment gap between the North and South. Policy experiments suggest that reducing the size of public employment reduces unemployment in lower productive regions while allowing for regional wage setting in the public sector almost eliminates the unemployment differential.

Does immigration increase labour market flexibility?

The question we investigate empirically in this article is whether immigration makes the labour supply in the receiving country more responsive to regional differences in economic opportunities. The main merit of the paper is that we examine three stages in the regional mobility of refugees and labour immigrants: First, the settlement pattern of newly arrived immigrants, second, their subsequent mobility between regions and, third, their eventual exit from the regional labour market to abroad. The analyses apply to immigrants who arrived in Norway from 1995 to 2004. In all three stages, mobility is investigated with regard to its responsiveness to regional differences in wages and unemployment. The main finding is that, in all three stages, the geographical mobility of immigrants is sensitive to regional economic opportunities. In that sense, immigrants do “grease the wheels” of the labour markets, through all the three stages of mobility. The most robust results are found for regional unemployment differences. With regard to natives, we generally do not find any strong evidence for “greasing the wheels” effects.

Compensation of Regional Unemployment in Housing Markets

Why are regional unemployment differentials in Europe so persistent if, as the wage curve literature demonstrates, there is no compensation through wages? Using Urban Audit data for 142 cities over 12 EU countries, as well as a Dutch household survey, we estimate relationships between local labour market indicators and the average house price level. The evidence suggests that workers are compensated in housing markets to a significant extent, so that regional differences in unemployment may reflect an equilibrium outcome.

Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy

Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy

Convergence in West German Regional Unemployment Rates

AbstractDifferences in regional unemployment rates are often used to describe regional economic inequality. This paper asks whether changes in regional unemployment differences in West Germany are persistent over time. Understanding the persistency of regional unemployment differences helps us to assess how effective regional policy can be. While univariate tests suggest that changes in regional unemployment differences are persistent in West Germany, more powerful panel tests lend some support to the hypothesis that regional unemployment rates converge. However, these tests reveal a moderate speed of convergence at best. Because there is a structural break following the second oil crisis, we also use tests that allow for such a break. This provides evidence for both convergence and quick adjustment to an equilibrium distribution of regional unemployment rates that is, however, subject to a structural break.

Regional Unemployment and Human Capital in Transition Economies

Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labor mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labor and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labor-market institutions, such as guaranteed welfare income raising effective minimum wages.

Aggregate Unemployment Decreases Individual Returns to Education

On the basis of a theoretical model, we argue that higher aggregate unemployment affects individual returns to education. We therefore include aggregate unemployment and an interaction term between unemployment and the individual education level in a standard Mincer equation. Our results show that an increase in regional unemployment by 1% decreases the returns to education by 0.005 percentage points. This implies that higher skilled employees are better sheltered from labour market changes with respect to their jobs but encounter larger wage changes than less skilled employees. Differences in regional unemployment can in addition almost fully explain the observed large differences in regional returns to education. We use representative individual data and regional panel variation in unemployment between different German regions and for different employee groups. We demonstrate that our results are robust with respect to aggregation bias, time lags and potential endogeneity of the unemployment variable.

Persistence and regional disparities in unemployment (Argentina 1980–1997)

We study the regional evolution of unemployment in Argentina for the period 1980–1997. First, we show that the Argentine regional unemployment structure is not very persistent. We find less persistence in Argentina than in the US. Second, we model the conditional means of regional unemployment and measure the persistence of unemployment to shocks based on our conditional model. We find a low degree of unemployment persistence to shocks. Finally, we identify regional factors that explain regional unemployment differences and whose changes account for the low persistence of the regional unemployment structure.

Unemployment and Labour-market Policy in the New Voivodeship System in Poland

The systemic transformation process and the introduction of market mechanisms involved in the labour market have brought about changes in the state and structure of the labour market in Poland. A measurable effect of those changes has been a drop in employment and the appearance of registered unemployment, whose level soon surpassed that of frictional unemployment and became a basic social problem. The situation in the Polish labour market is aggravated by the fact that there are wide regional differences in unemployment that persist despite variations in the level of national unemployment. The administrative reform implemented on 1 January 1999 has introduced a division of the country into 16 new voivodeships in place of the existing 49. The new system of big voivodeships endowed statutorily with a combination of central government and self-government functions was supposed to create conditions for a more effective labour-market policy at the regional scale. The aim of the present article is to analyse changes in the regional differences in unemployment resulting from the transition from the 49- to 16-unit administrative system. The analysis also covers changes in the institutionalization and implementation of labour-market policy at the regional level which followed from the reform.

Life After Mining: Hidden Unemployment and Changing Patterns of Economic Activity amongst Miners in England and Wales, 1981-1991

Official counts of unemployment in the coalfields have not reflected the large-scale losses of thousands of jobs from the mining industry in the 1980s and 1990s. Recent studies have suggested that there are indeed high incidences of unemployment among ex-miners and that much of the unemployment in the coalfields is `hidden', masked by the removal of miners from the official unemployment register through early retirement or being classed permanently sick. This paper examines how miners have been absorbed into the labour market over a ten-year period, between 1981 and 1991. Using data from the ONS Longitudinal Study a sample of miners are identified in 1981 and their labour market position in 1991 examined. The data are used to highlight changes in occupation, employment status and social class. In addition, regional differences in unemployment and joblessness are assessed.

Persistence and Turnover in Regional Unemployment Disparities

PEHKONEN J. and TERVO H. (1998) Reg. Studies, 32 , 445-458, Persistence and turnover in regional unemployment disparities. This study investigates persistence and turnover in regional unemployment disparities in Finland by examining time-series data on 10 labour districts and 423 municipalities. The data on the labour districts indicates that regional unemployment disparities are rather persistent and that steady-state unemployment rates differ considerably across the districts. The results on the municipality level data, however, suggest the presence of substantial intra-distribution dynamics and that the degree of persistence is less profound than the labour district data indicates. In all, the results are more in line with the disequilibrium than the equilibrium view of the causes of regional unemployment differences. PEHKONEN J. et TERVO H. (1998)La persistance et l'évolution des écarts du chômage régional, Reg. Studies 32 , 445- 458. Cette étude examine la persistance et l'évolution des écarts du chômage régional en Finlande à partir des données exprimées en série temporelle et provenant de dix bassins d'emploi et de 423 municipalités. Les données relatives aux bassins d'emploi laissent voir que les écarts du chômage régional ont tendance à persister et que la stabilité des taux de chômage varient sensiblement à travers les bassins. Cependant, au niveau de la municipalité les résultats laissent voir la présence d'une dynamique non-négligeable au sein de la distribution et une persistance moins marquée que les bassins d'emploi ne laissent supposer. A tout prendre, les résultats s'accordent mieux à l'explication des écarts du chômage régional qui remonte à la notion de d'équilibre plutôt qu' à la notion d'équilibre. PEHKONEN J. und TERVO H. (1998) Fortbestand und Wandel regionaler Ungleichheiten der Erwerbslosigkeit, Reg. Studies 32 , 445‐458. Dieser Aufsatz untersucht Fortbestand und Wandel regionaler Ungleichheiten der Erwerbslosigkeit in Finnland durch Überprüfung von Zeitseriendaten in zehn Arbeitsgebieten und 423 Gemeinden. Die Daten für die Arbeitsgebiete zeigen, daß regionale Ungleichheiten der Erwerbslosigkeit ziemlich hartnäckig sind, und gleichbleibende Erwerbslosigkeitsraten erheblich von einem Distrikt zum andern abweichen. Die Ergebnisse für Daten auf Gemeindeebene legen jedoch das Vorhandensein einer beträchtlichen Dynamik innerhalb der Verteilung nahe, und daß das Ausmaß des hartnäckigen Fortbestands weniger schwerwiegend ist als die Arbeitsgebietsdaten andeuten. Insgesamt stimmen die Ergebnisse eher mit der Auffassung eines gestörten Gleichgewichts als der des Gleichgewichts bezüglich der Ursache regionaler Erwerbslosigkeitsunterschiede überein.

Vacancy Dynamics and Labor Market Efficiency in the Dutch Labor Market

ABSTRACT This paper focuses on cyclical and regional variations in vacancy dynamics in labor markets with persistent imbalances between demand and supply. In particular the so‐called matching approach is used to investigate labor market efficiency across regions and over the business cycle. In this matching approach the relationship between the flow of filled vacancies and regional stocks of unemployed job seekers and vacant jobs is specified in a “search production” function. The matching approach is applied to the Dutch labor market, which is characterized by strong disequilibria and persistent regional differences in unemployment and vacancy rates. To explore the development of these regional imbalances from a demand side perspective, the dynamic structure of regional data on vacancies is analyzed over the business cycle. The movements of vacancy duration and the change in the vacancy stock over time appear to be similar across Dutch regions. Moreover, an investigation of the structural causes of regional variations in vacancy duration via shift‐share analysis makes clear that regional differences in sectoral composition of unfilled vacancies do not contribute to regional differences in vacancy duration in the period 1989–93. Estimation results of a matching model reveal that there are no region‐specific differences in labor market efficiency to produce filled vacancies. The ratio of vacancies to unemployment appears to be the critical determinant of the matching process in the Dutch regions. Another general (non region‐specific) finding is that the estimated labor market efficiency increases during recessionary and recovery periods while it decreases during an economic boom.

Differences in State Unemployment Rates: The Role of Labor and Product Market Structural Shifts

State unemployment rates diverged dramatically in the 1980s. Differing unemployment rates across states are an important public policy concern because of equity concerns and the pure human consequences of higher unemployment. Moreover, at the national level, a greater dispersion in state and regional unemployment rates can increase the natural rate of unemployment and shift the Phillips curve out because of an inefficient allocation of the labor force [3; 38]. One possible cause for the divergence in unemployment rates is national industrial restructuring. U.S. industrial restructuring was suggested by Lilien [26] as a cause for the rise in the national unemployment rate. Moreover, national restructuring can have differential impacts across states because states can have dramatically different mixes of industries from each other. One of the difficulties of national restructuring from a regional perspective is that it is difficult to avoid. On the other hand, if regional differences in unemployment are due to state idiosyncratic causes, state and local public policy can potentially play a more active role. For example, the economic problems that plagued the Northeast and California during the early 1990s have been typically attributed to national downsizing in the defense industries. Conversely, economic problems in these states may have been driven by factors that are located within the state, such as the collapse of their real estate markets.