Globalization, Peripherality and Regional Unemployment Divergence

Paolo Epifani

No 135, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: The cultural and geographic proximity between two regions otherwise very distant (both in terms of factor endowment and of specialization pattern) makes the wage perceived as fair in the peripheral region dependent on the wage prevailing in the core region. As a consequence, the peripheral wage is too high and unemployment results. This problem is exacerbated by the greater international division of labor brought about by globalization, which increases the coriperiphery labor productivity gap and so brings about a surge in unemployment in the periphery. Hence, this paper challenges, in a regional context, the view that a finer division of labor reduces unemployment, and offers an explanation of the growing differentials in the regional rates of unemployment observed in many EU countries in the last decades.

Keywords: regional unemployment; international division of labor; efficiency wages; Europe (search for similar items in EconPapers)
JEL-codes: F15 J14 R23 (search for similar items in EconPapers)
Date: 2000-03-01
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:135

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