Human capital and labour market resilience over time: a regional perspective of the Portuguese case

Marta Simões, João Andrade and Adelaide Duarte
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Marta Simões: University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics
Adelaide Duarte: University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics

No 2022-01, CeBER Working Papers from Centre for Business and Economics Research (CeBER), University of Coimbra

Abstract: This paper examines the influence of human capital on labour market resilience in the seven Portuguese NUTS-2 over the period 1995-2018. We define resilience as the ability of regional employment to recover from a shock to output over the business cycle. We use the Local Projection (LP) methodology applied to a SVAR model with three variables - employment, human capital, real GDP - and the output gap as the switching variable for the identification of recession and expansion regimes. We explore SVAR specifications that condition the response of the labour market to two scenarios: (a) the shock to GDP occurs during recessions; and (b) the shock to GDP occurs during expansions. The comparison of the employment responses to GDP shocks between the two regimes is informative about the degree of resilience of the labour market. We find evidence of: (i) distinct effects in terms of the sign and amplitude of GDP shocks on regional employment according to the level of educational attainment of the employees; (ii) labour market resilience and jobless recoveries in several regions; and (iii) different regional reactions of human capital to GDP shocks depending on the regime.

Keywords: Employment resilience; GDP shocks; local projections; structural VARs; NUTS2; Portugal (search for similar items in EconPapers)
JEL-codes: I25 J21 J24 R10 R15 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2022-01
New Economics Papers: this item is included in nep-geo, nep-mac and nep-ure
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Journal Article: Human capital and labour market resilience over time: a regional perspective of the Portuguese case (2022)
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