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Human capital and labour market resilience over time: a regional perspective of the Portuguese case

Author

Listed:
  • Marta Simões

    (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)

  • João Sousa Andrade

    (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)

  • Adelaide Duarte

    (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)

Abstract

This paper examines the influence of human capital on labour market resilience in the seven Portuguese NUTS-2 over the period 1995-2018. We define resilience as the ability of regional employment to recover from a shock to output over the business cycle. We use the Local Projection (LP) methodology applied to a SVAR model with three variables - employment, human capital, real GDP - and the output gap as the switching variable for the identification of recession and expansion regimes. We explore SVAR specifications that condition the response of the labour market to two scenarios: (a) the shock to GDP occurs during recessions; and (b) the shock to GDP occurs during expansions. The comparison of the employment responses to GDP shocks between the two regimes is informative about the degree of resilience of the labour market. We find evidence of: (i) distinct effects in terms of the sign and amplitude of GDP shocks on regional employment according to the level of educational attainment of the employees; (ii) labour market resilience and jobless recoveries in several regions; and (iii) different regional reactions of human capital to GDP shocks depending on the regime.

Suggested Citation

  • Marta Simões & João Sousa Andrade & Adelaide Duarte, 2022. "Human capital and labour market resilience over time: a regional perspective of the Portuguese case," CeBER Working Papers 2022-01, Centre for Business and Economics Research (CeBER), University of Coimbra.
    • Handle: RePEc:gmf:papers:2022-01
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    References listed on IDEAS

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    1. Paolo Di Caro, 2017. "Testing and explaining economic resilience with an application to Italian regions," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 93-113, March.
    2. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    3. Leonida CORREIA & Marina ALVES, 2017. "Regional Employment In Portugal: Differences And Cyclical Synchronisation," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 159-175, December.
    4. Diana A. Cooke & M. Ayhan Kose & Christopher Otrok & Michael T. Owyang, 2015. "Regional vs. Global: How Are Countries' Business Cycles Moving Together These Days?," The Regional Economist, Federal Reserve Bank of St. Louis, issue April.
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    Cited by:

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    More about this item

    Keywords

    Employment resilience; GDP shocks; local projections; structural VARs; NUTS2; Portugal;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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