Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34269
Authors: 
Jurajda, Štepán
Terrell, Katherine
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers 3176
Abstract: 
Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labor mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labor and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labor-market institutions, such as guaranteed welfare income raising effective minimum wages.
Subjects: 
Unemployment
human capital
regional labor markets
transition economies
labor mobility
complementarities
spillovers
Czech Republic
Hungary
Romania
Ukraine
JEL: 
E24
Document Type: 
Working Paper

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