Labour Market Flexibility and Regional Unemployment Rate Dynamics: Spain 1980-1995

Roberto Bande and Marika Karanassou ()

No 2593, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper aims to shed light in the dynamics of Spanish regional unemployment rates and determine the driving forces of their disparities. The Spanish economy has one of the highest unemployment rates in the EU and is characterised by severe regional disparities. We apply the chain reaction theory of unemployment according to which the evolution of unemployment is driven by the interplay of lagged adjustment processes and the spillover effects within the labour market system. Our model includes nationwide as well as region-specific variables, and takes into account the limited labour and firm mobility in Spain. We show that the degree of labour market flexibility differs between high and low unemployment regions, and find that investment has a major influence on the unemployment trajectory. In addition, we find that in bad times high unemployment regions are hit more severely than low unemployment regions, while in good times high unemployment regions do not benefit as much as low unemployment regions.

Keywords: lagged adjustment processes; labour market; spillover effects; unemployment; regional disparities (search for similar items in EconPapers)
JEL-codes: J64 R23 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-01
New Economics Papers: this item is included in nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Papers in Regional Science, 2009, 88(1), 181-207

Downloads: (external link)
https://docs.iza.org/dp2593.pdf (application/pdf)

Related works:
Journal Article: Labour market flexibility and regional unemployment rate dynamics: Spain 1980–1995* (2009)
Working Paper: Labour Market Flexibility and Regional Unemployment Rate Dynamics: Spain 1980-1995 (2006)
Working Paper: Labour Market Flexibility and Regional Unemployment Rate Dynamics: Spain (1980-1995) (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2593

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().