Regional Unemployment and its Persistence in Transition Countries

Abstract

We look at the differences in regional unemployment rates in six major transition countriesand their persistence over time. We analyse the role various adjustment mechanisms play.While movement out of the labour force seems to be one consequence in many regions withhigh relative unemployment, there are also signs of emerging wage flexibility. Employmentcreation, by contrast, has not picked up in regions of high unemployment. Labour mobilityalso remains very limited in size although it appears to respond to basic economic incentives.Policies addressing housing market imperfections and information asymmetries arenecessary to increase worker mobility and to integrate better national labour markets.

Keywords: mobility, regional unemployment, transition

JEL Classification: J61, P2