The existence of a “size” effect on unemployment, related to the dimension of regional labour market, is often attributed to the presence of agglomeration of people and firms. However, urban and industrial cluster agglomeration effects are theoretically and empirically different. In this paper, we propose to disentangle agglomeration effects due to high concentration of population and those due to firm’s clusters or high presence of employees, by controlling for a wide set of variables, basically related to sectorial and dimensional shocks and human capital, in order to highlight the total “size” effect in the labour market. We estimate the correlation between unemployment and agglomeration in UE27 at disaggregated territorial level (Nuts 2), conditioning for covariates related to demographic, economic and geographical effects. Moreover, regional labour markets are spatial correlated within contiguous areas: we carefully model the presence of spatial correlation by a spatial lag model. We expect that the size effect is lower in Europe than in USA. Nevertheless, effects related to agglomeration of firms could be higher than effects related to agglomeration of people. The results show that urban agglomeration in Europe has a negative effect on employment; the results are opposite for industrial clusters, where the presence of firm’s agglomeration has a positive effect on labour markets. These results suggest some policy implications. First of all, government should increase the circulation of labour market information in order to enhance the matching between job seekers and labour positions even in urban areas. Incentive for reducing the costs of search cannot obviously be limited to the case of contiguity between the supply and demand of skills, but also regards the acquisition of information and knowledge which often occurs through informal chains, less strong in urban centres. Improvements in the quality of the matching require policies able to disseminate information which can substitute those channels. It is important to reduce the costs of getting information in order to avoid the discouraging effect on job search activities.
DE CASTRIS, M., Pellegrini, G. (2012). Does Spatial Agglomeration decrease Regional Unemployment? Some evidence from Europe. In Economic Policy in Times of Crisis.
Does Spatial Agglomeration decrease Regional Unemployment? Some evidence from Europe
DE CASTRIS, MARUSCA;
2012-01-01
Abstract
The existence of a “size” effect on unemployment, related to the dimension of regional labour market, is often attributed to the presence of agglomeration of people and firms. However, urban and industrial cluster agglomeration effects are theoretically and empirically different. In this paper, we propose to disentangle agglomeration effects due to high concentration of population and those due to firm’s clusters or high presence of employees, by controlling for a wide set of variables, basically related to sectorial and dimensional shocks and human capital, in order to highlight the total “size” effect in the labour market. We estimate the correlation between unemployment and agglomeration in UE27 at disaggregated territorial level (Nuts 2), conditioning for covariates related to demographic, economic and geographical effects. Moreover, regional labour markets are spatial correlated within contiguous areas: we carefully model the presence of spatial correlation by a spatial lag model. We expect that the size effect is lower in Europe than in USA. Nevertheless, effects related to agglomeration of firms could be higher than effects related to agglomeration of people. The results show that urban agglomeration in Europe has a negative effect on employment; the results are opposite for industrial clusters, where the presence of firm’s agglomeration has a positive effect on labour markets. These results suggest some policy implications. First of all, government should increase the circulation of labour market information in order to enhance the matching between job seekers and labour positions even in urban areas. Incentive for reducing the costs of search cannot obviously be limited to the case of contiguity between the supply and demand of skills, but also regards the acquisition of information and knowledge which often occurs through informal chains, less strong in urban centres. Improvements in the quality of the matching require policies able to disseminate information which can substitute those channels. It is important to reduce the costs of getting information in order to avoid the discouraging effect on job search activities.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
