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In Discussion Paper No. 1085 , Research Affiliate Jörg Decressin and Antonio Fatás analyse to what extent regional employment dynamics are common to all regions in Europe and to all states in the US. Their analysis uses labour market data covering 51 EU regions and the US 50 states (plus the District of Columbia). The authors first check the extent to which movements in regional employment can be attributed to European wide or US wide developments. They find that in Europe about 80 per cent of regional dynamics are idiosyncratic (not explained by Europe-wide developments). In the US, only 40 per cent of changes in employment are specific to regions.Next they analyse the response of employment, unemployment, labour force participation and migration triggered by region specific shocks. They find that regional shocks to labour markets have permanent effects on the regional share of employment. In other words, when a region goes into a recession, its employment declines relative to Europe-wide employment. Lastly, they check the robustness of the results by analysing regions within the same country, rather than for the pooled sample of all European regions. They find that their results are little changed. In all cases, flows into or out of the labour force are responsible for the short-run changes in regional employment. Unemployment plays less of a role in the adjustment and there is hardly any migration in the first three years following a shock. Regional Labour Market Dynamics in Europe Jörg Decressin and Antonio Fatás Discussion Paper No. 1085, December 1994 (IM) |