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Output growth thresholds for the creation of employment and the reduction of unemployment: A spatial analysis with panel data from the Spanish provinces, 2000–2011

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  • Buendía Azorín, José Daniel
  • Sánchez de la Vega, María del Mar

Abstract

The financial crisis that set in at the end of 2007 and the ensuing years of recession have had devastating effects on the labor markets. This has led us to research into employment thresholds -Verdoorn's law - and unemployment - Okun's law - from the perspective of the Spanish provinces. We use a spatial SUR model which allows us to link the panel data with analysis of spatial dependence in order to obtain efficient and robust results about the stability of the Verdoorn and Okun coefficients. We remove the spatial dependence by using spatial filtering techniques from the semiparametric method of vector decomposition. The results show that thresholds vary over time and the output growth required for a rise in employment is well below the level necessary to reduce the unemployment rate.

Suggested Citation

  • Buendía Azorín, José Daniel & Sánchez de la Vega, María del Mar, 2017. "Output growth thresholds for the creation of employment and the reduction of unemployment: A spatial analysis with panel data from the Spanish provinces, 2000–2011," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 42-49.
    • Handle: RePEc:eee:regeco:v:67:y:2017:i:c:p:42-49
    DOI: 10.1016/j.regsciurbeco.2017.08.004
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    More about this item

    Keywords

    C23; E24; R23; Panel data; Employment and unemployment; Regional labor markets;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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