Regional Unemployment and Human Capital in Transition Economies

Stepan Jurajda and Katherine Terrell

No 3176, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: Romania; Hungary; complementarities; labor mobility; regional labor markets; transition economies; human capital; unemployment; spillovers; Czech Republic; Ukraine (search for similar items in EconPapers)
JEL-codes: E24 J0 J61 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2007-11
New Economics Papers: this item is included in nep-edu, nep-eec, nep-geo, nep-hrm, nep-lab, nep-mac, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Economics of Transition, 2009, 17 (2), 241–274

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Related works:
Working Paper: Regional Unemployment and Human Capital in Transition Economies (2007)
Working Paper: Regional Unemployment and Human Capital in Transition Economies (2007)
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