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The Mystery Of Regional Unemployment Differentialsa Survey Of Theoretical And Empirical Explanations

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  • Elhorst, J. Paul
Abstract
This paper attempts to provide an integrated overview of theoretical and empirical explanations used in the applied literature on regional unemployment differentials. On the basis of 41 empirical studies, four different model types covering nine theoretical constructs of regional unemployment determination and 13 sets of explanatory variables are identified. The overall conclusion is that theoretical and empirical explanations help to reduce the weaknesses in each other. While theory is found to predict that the regional unemployment rate depends on labour supply factors (a collection of factors which affect natural changes in the labour force, labour force participation, migration and commuting), labour demand factors and wage-setting factors, it is the empirical studies that gain a more profound understanding of the explanatory variables involved. Conversely, whereas most empirical studies provide clear-cut explanations for the signs of the explanatory variables, it is theory that shows that some of these explanations might be out of proportion. By grouping many studies together, this paper shows that there are indeed clear-cut trends.
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  • Elhorst, J. Paul, 2000. "The Mystery Of Regional Unemployment Differentialsa Survey Of Theoretical And Empirical Explanations," ERSA conference papers ersa00p60, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa00p60
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    7. Niebuhr, Annekatrin, 2002. "Spatial dependence of regional unemployment in the European Union," HWWA Discussion Papers 186, Hamburg Institute of International Economics (HWWA).
    8. Ines Murillo & Fernando Núñez & Carlos Usabiaga, 2005. "Differentials and persistence in unemployment - an analysis of the Spanish regions with the highest unemployment rates," ERSA conference papers ersa05p278, European Regional Science Association.
    9. Petri Böckerman & Kari Hämäläinen & Mika Maliranta, 2004. "Sources of Job and Worker Flows: Evidence from a Panel of Regions," LABOUR, CEIS, vol. 18(1), pages 105-129, March.
    10. Floro Ernesto Caroleo & Gianluigi Coppola, 2006. "The Impact of the Institutions on Regional Unemployment Disparities in Europe," Discussion Papers 4_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    11. Roberto Ezcurra, 2011. "Unemployment Volatility and Regional Specialization in the European Union," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1121-1137.
    12. Hasan Engin Duran, 2015. "Regional Employment Volatility In Turkey: Causes And Consequences," Working Papers 2015/06, Turkish Economic Association.
    13. Michelle Gilmartin & Dimitris Korobilis, 2012. "On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 179-195, May.
    14. David C Maré & Wai Kin Choy, 2001. "Regional Labour Market Adjustment and the Movements of People: A Review," Treasury Working Paper Series 01/08, New Zealand Treasury.
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