Abstract
This chapter aims to describe regional disparities in the labour market performance of two southern EU countries, Greece and Spain, during the period covering the economic boom and the recession caused by the international financial crisis at the end of the last decade. The crisis hit these two economies with particular virulence due to their macroeconomic imbalances and the weaknesses of their economic structures. This resulted in adjustments in employment and wages in regions that were among the most dynamic during the booming period. An important factor in processes of adjustment, and in the determination of equilibrium outcomes with regard to wages and unemployment more generally, has to do with the human capital endowment available to each regional economy. Thus, this chapter also provides evidence of the effect of the individuals’ level of education on unemployment and wages in each region. The hypothesis is that the regional distribution of individuals’ education would be a key driver of disparities in labour market outcomes and in regional responses to the crisis, and that the impact that education has on unemployment and wages varies depending on the region.
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Notes
- 1.
SES data are also available for Greece although access to this data is restricted and at the time of writing this chapter such data were not available to us. In any case, as we show later, the impact of the crisis in Greece, in contrast to what happened in Spain, unfolded largely after 2010 and thus the use of LFS data, which covers the years up to 2012 is imperative.
- 2.
Our working-age sample is 50,529, 48,605, 49,076 and 38,151 for the years 2002, 2006, 2010 and 2012 respectively. Wage-earners for the same years are 17,188, 17,978, 17,861 and 11,363. Note that in 2012 total sample size drops to 25,000 households (61,000 individuals).
- 3.
For Greece, the LFS data cover all employees in all sectors. This adds crucial detail in the information processed in this chapter, as small-firm employment in Greece accounts for a large part of total salaried employment. To keep consistency with the wage data for Spain, we exclude public-sector workers from the Greek sample. The implication, however, is that the wage data for Greece are not directly comparable with those of Spain. We account for this in our subsequent discussion of the two country cases in Sects. 6.3 and 6.6.
- 4.
For the top, open-ended band, we set the upper limit to 2.250 € (calculated as the lower limit of the open interval plus two times the width of the closed intervals). We also experimented with other ‘mean’ values for this band, but this did not influence the substance of the results we obtain.
- 5.
However, it should be kept in mind that the source of the Spanish data on actives is different to the one of wage earners. Despite using a similar methodology to compute the years of schooling in both cases, comparability cannot be guaranteed as the sample of wage earners does not include workers in firms with less than 10 employees in Spain. Therefore, the comparison should be made with caution.
- 6.
In computing the difference in the probability of unemployment between levels of education, we have used 6 years between primary and the high level of secondary schooling, and 5 years between the latter level and tertiary education. The figures in the text result from multiplying these amounts by the corresponding estimate of the marginal effect.
- 7.
Similar differences are found for the case of the wage-returns to education, although, as noted earlier, in this case our results are not directly comparable due to differences in the composition of the relevant samples and the measurement of the wage variable.
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Acknowledgments
The authors wish to acknowledge financial support from the European Community’s Seventh Framework Programme (FP7-SSH-2010-2.2-1) under grant agreement n° 266834, SEARCH Project. EL-B and EM wish also to thank the support of the Spanish Ministry of Economics and Competitiveness, National Program of R&D, under the project ECO2014-59493-R.
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López-Bazo, E., Monastiriotis, V., Motellón, E. (2017). The Role of Education in Regional Labour Markets: Evidence from Two Fragile Economies. In: Fonseca, M., Fratesi, U. (eds) Regional Upgrading in Southern Europe. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-49818-8_10
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