Working Paper: CEPR ID: DP1259
Authors: Samuel Bentolila; Juan F. Jimeno
Abstract: This paper examines the degree of persistence of regional relative unemployment. A theoretical model is built to explain the role of migration, labour-force participation, and real wage flexibility at the regional level, in determining such persistence. The model is used to account for the observed degree of persistence of regional relative unemployment in Spain, as compared to the US and the EU, also providing new estimates on real wage flexibility in Spanish regions.
Keywords: Regional; Labour Adjustment; Unemployment Persistence
JEL Codes: E24; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage rigidity (J31) | high unemployment persistence (J64) |
| low responsiveness of migration to regional labor demand shocks (J69) | high unemployment persistence (J64) |
| low responsiveness of labor participation to regional labor demand shocks (J69) | high unemployment persistence (J64) |
| low regional real wage flexibility (F16) | high unemployment persistence (J64) |
| wage flexibility (J31) | unemployment persistence (J64) |
| labor demand shocks (J23) | unemployment outcomes (J65) |