Should a nation concentrate on its own unemployment problems when
designing strategies to tackle it? One level deeper, should a
region do so too? Two main questions of this thesis are whether
regional unemployment in Europe is spatially dependent and whether
it is of equilibrium or disequilibrium nature. These questions are
attempted to be answered through a dynamic spatial panel data model
incorporating a spatial lag as well as a spatial error term,
looking at a data set including 258 European regions ranging from
2003 to 2009. The results highly suggest interregional cooperation
designing unemployment policies, disregarding national borders in
Europe. Furthermore, the spatial decay appears to be relatively
slow, highlighting non-negligible spillover effects. Lastly,
regions with low shares of employees with tertiary education
performed significantly worse than others.
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