DP11551 What drives employment growth and social inclusion in EU regions?

Author(s): Marco Di Cataldo, Andrés Rodríguez-Pose
Publication Date: October 2016
Keyword(s): employment, Europe, regions, skills, social exclusion
JEL(s): J64, O52, R23
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11551

The European Union promotes development strategies aimed at producing growth with "a strong emphasis on job creation and poverty reduction"?. However, whether the economic conditions in place in EU regions are ideal for the generation of high- and low-skilled employment and labour market inclusion is unclear. This paper assesses how the key factors behind EU growth strategies -infrastructure, human capital, innovation, quality of government- condition employment generation and labour market exclusion in European regions. The findings indicate that the dynamics of employment and social exclusion vary depending on the conditions in place in a region. While higher innovation and education contribute to overall employment generation in some regional contexts, low-skilled employment grows the most in regions with a better quality of government. Regional public institutions, together with the endowment of human capital, emerge as the main factors for the reduction of labour market exclusion - particularly in the less developed regions- and the promotion of inclusive employment growth across Europe.