Unemployment Convergence in Transition

Joanna Tyrowicz and Piotr Wójcik

Chapter 11 in Economic Growth and Structural Features of Transition, 2010, pp 236-259 from Palgrave Macmillan

Abstract: Abstract In a seminal paper Blanchard and Katz (1992) argue that over the long run labour markets should adjust towards a common equilibrium through two main channels. Either unemployed workers can undertake employment in regions where labour demand exceeds supply or capital can flow to low-wage locations to take advantage of lower labour costs. Therefore, one should observe convergence of regional unemployment rates. Naturally, the speed of adjustment may indeed be very slow — and differing — leading to relatively persistent unemployment disparities, as forcefully argued by Armstrong and Taylor (2000). Furthermore, ‘new’ shocks may arrive before the consequences of the previous ones are fully absorbed, which may foster the process of regional unemployment rates converging towards differentiated equilibria.

Keywords: Labour Market; Czech Republic; Unemployment Rate; Kernel Density Estimate; Transition Country (search for similar items in EconPapers)
Date: 2010
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Working Paper: Unemployment Convergence in Transition (2008)
Working Paper: Unemployment Convergence in Transition (2008)
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DOI: 10.1057/9780230277403_12

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