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Regional Economic Repercussions of an Economic Crisis: A Sectoral Analysis

Aki Kangasharju () and Sari Pekkala Kerr ()

No 248, Discussion Papers from VATT Institute for Economic Research

Abstract: This paper investigates the evolution of regional disparities in Finland between 1988 and 1997. The analysis focuses on per capita GDP and its subcomponents, particularly labour productivity, jobs and population. The results show, first, that the evolution of labour productivity and the number of jobs account for the emerged regional divergence of per capita GDP during 1990-1995. Second, even though inter-regional migration tends to have convergent effects on regional per capita GDP, its effect was not strong enough during 1990-1995: the divergence of productivity and jobs dominated. Third, among divergent factors (productivity and jobs), manufacturing contributes the most to the divergence of per capita GDP, whereas private services is the main convergent sector. One conclusion of the paper is that the divergent forces are gaining strength at the expense of convergent ones, as migration directs population into largest regional centres. A decline in convergent factors may occur as migration decreases the need for private sector jobs outside the centres.

Keywords: Regional disparities, recession, labour productivity, Economic growth, Taloudellinen kasvu, Labour market, Työmarkkinat, Regional development, Aluekehitys, Effectiveness of public services, Julkisten palvelujen vaikuttavuus, E320 - Business Fluctuations; Cycles, O470 - Measurement of Economic Growth; Aggregate Productivity, R110 - Regional Economic Activity: Growth, Development, and Changes, (search for similar items in EconPapers)
Date: 2001
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