Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/69333 
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Papers No. 7126
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper aims to provide a frame of mind to understand the link between structural change and regional unemployment, and, based on it, to survey the most recent literature. An overly optimistic view on the ability of the adjustment mechanism to generate convergence in local unemployment rates has long neglected the question of how regional imbalances arise in the first place. The availability of new longitudinal data sets allows us looking again at this issue with a fresh look, starting from patterns of reallocation among labour market statuses. The main conclusion of recent research is that high unemployment regions have a higher, not a lower rate of reallocation; this suggests, in turn, that they do not suffer from low job creation, but, rather, from high job destruction, and this is because of the low competitiveness of any economic activity. Our findings sound as a renowned justification of the need for demand side policy, especially aimed at increasing the life expectancy of private businesses in high unemployment regions.
Subjects: 
industrial change
job destruction
labour turnover
adjustment mechanism
regional unemployment
JEL: 
J6
P2
R1
R23
Document Type: 
Working Paper

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