Spatial Interactions of Regional Labour Markets in Europe
Social Science Research Network
This study investigates the spatial dependence of unemployment and employment rates in Europe relying on Eurostat NUTS2 level data for 306 European regions. Spatial dependence is explored using spatial error, spatial lag and a spatial autoregressive model with spatial autoregressive disturbances. The findings show that regional labour markets in Europe cluster in spaceregions with high (low) (un)employment rate are surrounded by regions with high (low) (un)employment rate. The study provides
... e study provides evidence that significant spillovers across regional labour markets exist. The (un)employment rate in one region is directly affected by (un)employment rate changes in other regions, but also by unobserved shocks in other regions. It was found that the spatial effects are not determined by differences in the share of the population of youth, differences in industrial structure or difference in human capital. The results of the study confirm the importance of close coordination between regions while developing labour market and regional policy measures. JEL Classification: C21, E24, R23 This paper is based on my master thesis. I would like to thank my supervisor professor Tiiu Paas for her support and guidance throughout the whole writing process. I am grateful to Jaan Masso and Kadri Ukrainski for useful comments and thoughts on the earlier versions, to Amaresh K. Tiwari for his thoughtful comments and to Sven-Kristjan Bormann for his thorough feedback. I am solely responsible for all remaining errors and omissions.