abstract: 'High unemployment and regional inequalities are major concerns for

  European policy makers. but so far connections between policies dealing

  with unemployment and regional inequalities have been few and weak. We

  think that this should change. This paper documents a regional and

  transnational dimension to unemployment - i.e.. geographical

  unemployment clusters that do not respect national boundaries. Since the

  Mid 1980s, regions with high or low initial unemployment rates saw

  little change, while regions with intermediate unemployment moved

  towards extreme values. During,, this polarization, nearby regions

  tended to share similar outcomes due, we argue, to spatially related

  changes in labour demand. These spatially correlated demand shifts were

  due in part to initial clustering of low-skilled regions and badly

  performing industries but a significant neighbour effect remains even

  after controlling for these, and the effect is as strong within as it is

  between nations. We believe this reflects agglomeration effects of

  economic integration. The new economic geography literature shows how

  integration fosters employment clusters that need not respect national

  borders. If regional labour forces do not adjust, regional unemployment

  polarization with neighbour effects can result. To account for these

  `neighbour efficiency a cross-regional and transnational dimension

  should be added to national policies. actions should consider policies

  that encourage regional wage setting, and short distance mobility, and

  the EU should consider including transnational considerations in its

  regional policy, since neighbour effects on unemployment mean that an

  anti-unemployment policy paid for by one region will benefit

  neighbouring regions. Since local politicians gain no votes or tax

  revenues from these `spillozeis'', they are likely to underestimate the

  true benefit of the policy and thus tend to undertake too little of it.'
affiliation: 'Overman, HG (Corresponding Author), Univ London London Sch Econ \& Polit
  Sci, London WC2A 2AE, England.

  Univ London London Sch Econ \& Polit Sci, London WC2A 2AE, England.

  Univ Toronto, Toronto, ON M5T 1R8, Canada.'
author: Overman, HG and Puga, D and Vandenbussche, H
author_list:
- family: Overman
  given: HG
- family: Puga
  given: D
- family: Vandenbussche
  given: H
da: '2023-09-28'
eissn: 1468-0327
files: []
issn: 0266-4658
journal: ECONOMIC POLICY
language: English
month: APR
number: '34'
number-of-cited-references: '21'
orcid-numbers: Puga, Diego/0000-0003-2640-1534
pages: 115-147
papis_id: 58254fa6c98e9167fd34cbc836e3e7b7
ref: Overman2002unemploymentclusters
researcherid-numbers: Puga, Diego/A-9184-2008
times-cited: '36'
title: Unemployment clusters across Europe's regions and countries
type: Article
unique-id: WOS:000175384700004
usage-count-last-180-days: '0'
usage-count-since-2013: '0'
web-of-science-categories: Economics
year: '2002'