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CofFEE Working Papers

Author(s): William Mitchell and Michael Flanagan
Title: The changing patterns of labour underutilisation in Europe in the face of policy austerity
No: 14-01
Year: 2014

Abstract:

¬ít°This article examines the impact of the Global Financial Crisis and ensuing fiscal austerity on regional labour markets in Europe by analysing the changing spatial pattern of unemployment between 2008 and 2013 in Europe compared to the earlier growth period from 2003 to 2008. Concentration, dispersion and global and local spatial autocorrelation measures are first used to examine the two time periods, with the results showing the convergence in regional unemployment rates that occurred from 2003 to 2007 has reversed as a consequence of the GFC and the austerity measures that followed. The divergence of unemployment rates has risen each year from 2009 to 2013. Spatial econometric techniques show evidence of significant spatial autocorrelation and the importance of regional employment growth in explaining the changing pattern of regional unemployment in Europe. The different elements of the analysis also confirm that the spatial pattern of unemployment changed in the post-GFC period compared to the earlier growth period. While the GFC was clearly a damaging event, the results suggest the imposition of policy austerity intensified the spatial dependence in regional unemployment rates.

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