Regional Economic Disparities in Finland

Paolo Fornaro

No 68, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract In this note, I study the Finnish regional dispersion of economic indicators such as the GDP per capita, labour productivity, the employment rate and the compensation of employees. Moreover, I examine the regional-level correlation between these variables. The results are then compared with what has been found for the German and Italian economies. Finnish regional economies display substantial variation, but their GDP per capita, productivity and employment rate have converged. However, the compensation of employees has diverged. Compared to Germany and Italy, the Finnish economy has a lower regional dispersion, with a similar convergence process as in Germany. The correlation between regional productivity and the employment rate is lower than what is found in Italy and Germany, and the same holds for productivity and wages. The picture gathered from this analysis is mixed. Convergence of economic conditions is certainly positive, but the divergence of the compensation of employees can be problematic for the long-term sustainability of the Finnish regional markets. If well-paid jobs concentrate in richer regions, there will be higher incentives for young and well-educated workers to move away from peripheral (in economic terms) areas, which would be at risk of stagnation.

Keywords: Convergence; regional inequalities; productivity; wages (search for similar items in EconPapers)
JEL-codes: O47 R11 R23 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2018-06-25
New Economics Papers: this item is included in nep-eur, nep-geo, nep-knm and nep-ure
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