Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 355: Unemployment in European Regions: Structural Problems vs. the Eurozone Hypothesis

Åke E. Andersson (), David Emanuel Andersson (), Björn Hårsman () and Zara Daghbashyan ()
Additional contact information
Åke E. Andersson: Jönköping International Business School, Postal: Department of Economics, Finance and Statistics, , PO Box 1026, , 551 11 Jönköping, , Sweden
David Emanuel Andersson: Nottingham University Business School China, Postal: Department of Quantitative and Applied Economics, , University of Nottingham, , Ningbo 315100, Zhejiang, , China
Björn Hårsman: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Zara Daghbashyan: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: Unemployment rates differ dramatically across European regions. This paper analyses these differences by integrating institutional and spatial perspectives into a unified theoretical framework. An econometric model is then used to analyse differences among European NUTS2 regions. The results of random-effects models indicate that there are four key factors that explain regional unemployment rates. Flexible labour market regulations and above-average levels of interpersonal trust are institutional factors that reduce unemployment. Accessibility factors such as inter-regional transport connectivity and local access to skilled workers have similarly substantial effects. Whether a region belongs to the Eurozone or not seems to be less important.

Keywords: unemployment; Euro; institutions; accessibility

JEL-codes: R10; R15; R23; R28

37 pages, March 26, 2014

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