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Aki Kangasharju - One of the best experts on this subject based on the ideXlab platform.

  • ageing shocks and short run Regional Labour Market dynamics in a spatial panel var approach
    Applied Economics, 2018
    Co-Authors: Timo Mitze, Torben Dall Schmidt, Daniel Rauhut, Aki Kangasharju
    Abstract:

    ABSTRACTUsing a flexible spatial panel VAR model for a small-scale Labour Market system, we investigate the dynamic interdependences between changes in the demographic structure and the Labour Market performance of a Regional economy. With a particular focus on ageing shocks, we describe an increase in the share of elderly in Regional population due to exogenous changes in the institutional context, such as pension reforms. The Regional Labour Market implications of an ageing shock are then tested with regard to the effects on employment growth, unemployment and Labour participation rate. Our results based on a sample of 71 Scandinavian regions point to negative Regional Labour Market effects of an ageing shock implying a reduction in employment growth and a temporarily declining Labour participation rate, while the unemployment rate increases. Importantly, spatial spillovers amplify these negative impacts through a marginalization of macro-Regional Labour Markets. As a robustness check, we reverse the ca...

  • Ageing shocks and short-run Regional Labour Market dynamics in a spatial panel VAR approach
    Applied Economics, 2017
    Co-Authors: Timo Mitze, Torben Dall Schmidt, Daniel Rauhut, Aki Kangasharju
    Abstract:

    Using a flexible spatial panel VAR model for a small-scale Labour Market system, we investigate the dynamic interdependences between changes in the demographic structure and the Labour Market performance of a Regional economy. With a particular focus on ageing shocks, we describe an increase in the share of elderly in Regional population due to exogenous changes in the institutional context, such as pension reforms. The Regional Labour Market implications of an ageing shock are then tested with regard to the effects on employment growth, unemployment and Labour participation rate. Our results based on a sample of 71 Scandinavian regions point to negative Regional Labour Market effects of an ageing shock implying a reduction in employment growth and a temporarily declining Labour participation rate, while the unemployment rate increases. Importantly, spatial spillovers amplify these negative impacts through a marginalization of macro-Regional Labour Markets. As a robustness check, we reverse the causal ordering and analyze the responses to a positive macroeconomic shock which initially increases employment growth. We find direct and spatially indirect adjustment patterns characterized by a reduction of the unemployment rate, an increase in the Labour participation rate and a decrease in the share of elderly in the population.

  • Regional Labour Market adjustment are positive and negative shocks different
    Labour, 2002
    Co-Authors: Sari Pekkala, Aki Kangasharju
    Abstract:

    This paper analyses Regional Labour Market adjustment in the Finnish provinces during 1971–96. It investigates the interrelations of employment, unemployment and Labour force participation to examine how a change in Labour demand is adjusted to. The study questions the usual assumption that positive and negative shocks evoke similar adjustment processes. Instead, we test for the possibility that the effects of positive and negative shocks are asymmetric. The analysis reveals that there is little asymmetry in the adjustment to region-specific Labour demand shocks, but adjustment to total (region-specific plus common component) shocks displays more asymmetry. The region-specific component of a Labour demand shock has short-lived effects on unemployment and participation, and its effect on employment is very small but permanent [persistent?]. Initially, most of the fall in employment is absorbed by the unemployment and participation rate, but after a few years migration plays a larger role in the adjustment process.

  • Adjustment to Regional Labour Market Shocks
    2002
    Co-Authors: Aki Kangasharju, Sari Pekkala
    Abstract:

    This paper analyses Regional Labour Market adjustment in the Finnish provinces during 1976-2000. It investigates the inter-relations of employment, unemployment, Labour force participation and migration to see how a change in region-specific and total Labour demand is adjusted. The analysis reveals that a region-specific Labour demand shocks adjust mainly via participation whereas total shocks are adjusted by unemployment. The region-specific component of Labour demand shock has shorter-lived effects on unemployment and participation, but its effect on employment is permanent. Conversely, total shocks leave no permanent effect. Migration is more important in the region-specific case where, after a few years, it gets a large role in the adjustment process.

  • Regional Labour Market Adjustment: Are Positive and Negative Shocks Different?
    Labour, 2002
    Co-Authors: Sari Pekkala, Aki Kangasharju
    Abstract:

    This paper analyses Regional Labour Market adjustment in the Finnish provinces during 1971-96. It investigates the interrelations of employment, unemployment and Labour force participation to examine how a change in Labour demand is adjusted to. The study questions the usual assumption that positive and negative shocks evoke similar adjustment processes. Instead, we test for the possibility that the effects of positive and negative shocks are asymmetric. The analysis reveals that there is little asymmetry in the adjustment to regiondspecific Labour demand shocks, but adjustment to total (regiondspecific plus common component) shocks displays more asymmetry. The regiondspecific component of a Labour demand shock has shortdlived effects on unemployment and participation, and its effect on employment is very small but permanent [persistent?]. Initially, most of the fall in employment is absorbed by the unemployment and participation rate, but after a few years migration plays a larger role in the adjustment process. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2002.

Peter Nijkamp - One of the best experts on this subject based on the ideXlab platform.

  • A spatial-dependence continuous-time model for Regional unemployment in Germany
    2008
    Co-Authors: Henk Folmer, Roberto Patuelli, Peter Nijkamp
    Abstract:

    This paper analyzes patterns of Regional Labour Market development in Germany over the period 2000-2003 by means of a spatial-dependence continuous-time model. (Spatial) panel data are routinely modelled in discrete time. However, there are compelling arguments for continuous time modelling of (spatial) panel data. Particularly, most social processes evolve in continuous time such that analysis in discrete time is an oversimplification, gives a distorted representation of reality and leads to misinterpretation of estimation results. The most compelling reason for continuous time modelling is that, in contrast to discrete time modelling, it allows for adequate modelling of dynamic adjustment processes (see, for example, Special Issue 62:1, 2008, of Statistica Neerlandica). We introduce spatial dependence in a continuous time modelling framework and apply the unified framework to Regional Labour Market development in Germany. The empirical results show substantial autoregressive effects for unemployment and population development, as well as a negative effect of unemployment development on population development. The reverse effect is not significant. Neither are the effects of the development of Regional average wages and of the manufacturing sector on the development of unemployment and population.

  • a rank order test on the statistical performance of neural network models for Regional Labour Market forecasts
    The Review of Regional Studies, 2007
    Co-Authors: Roberto Patuelli, Peter Nijkamp, Simonetta Longhi, Aura Reggiani, Uwe Blien
    Abstract:

    Using a panel of 439 German regions, we evaluate and compare the performance of various Neural Network (NN) models as forecasting tools for Regional employment growth. Because of relevant differences in data availability between the former East and West Germany, the NN models are computed separately for the two parts of the country. The comparisons of the models and their ex post forecasts are carried out by means of a non-parametric test: viz. the Friedman statistic. The Friedman statistic tests the consistency of model results obtained in terms of their rank order. Since there is no normal distribution assumption, this methodology is an interesting substitute for a standard analysis of variance.

  • forecasting Regional Labour Market developments under spatial heterogeneity and spatial autocorrelation
    2005
    Co-Authors: Simonetta Longhi, Peter Nijkamp
    Abstract:

    Because of heterogeneity across regions, economic policy measures are increasingly targeted at the Regional level. As a result, the need for economic forecasts at a sub-national level is rapidly increasing. The data available to compute Regional forecasts is usually based on a pseudo-panel that consists of a limited number of observations over time, and a large number of areas (regions) strongly interacting with each other. In such a situation, the application of traditional time-series techniques to distinct time series of Regional data may then become a sub-optimal forecasting strategy. In the field of Regional forecasting of socio-economic variables, both linear and non-linear models have recently been applied and evaluated. However, often such analyses tend to ignore the spatial structure of the data and the spatial interactions that are likely to exist among regions. In this paper, we evaluate the ability of different statistical techniques – namely spatial lag and spatial error models – to correct for misspecification due to neglected spatial autocorrelation in the data set. Our empirical application concerns short-term forecasts of employment in 326 West German Labour Market regions. We find that the superimposed spatial structure that is required for the estimation of spatial models improves the forecasting performance of non-spatial forecasting models.

  • forecasting Regional Labour Market developments under spatial heterogeneity and spatial autocorrelation
    2005-041 3, 2005
    Co-Authors: Simonetta Longhi, Peter Nijkamp
    Abstract:

    Because of heterogeneity across regions, economic policy measures are increasingly targeted at the Regional level and, therefore, require Regional forecasts. The data available to compute Regional forecasts are usually a pseudo panel of a limited number of observations over time and a large number of regions strongly interacting with each other. Traditional time-series techniques applied to distinct time series of Regional data are probably a suboptimal forecasting strategy. Although both linear and nonlinear models have been applied and evaluated to forecast socioeconomic variables, spatial interactions among regions are often ignored. This article evaluates the ability of spatial error and spatial lag models to correct for misspecifications due to neglected spatial autocorrelation in the data. The empirical application on short-term forecasts of employment in 326 West German regions shows that the superimposed spatial structure that is required for the estimation of spatial models improves the forecasting performance of nonspatial models.

  • Analysis of Regional Labour Market dynamics: In search of indications for self-organised criticality
    Journal of Geographical Systems, 2003
    Co-Authors: Rainer Andergassen, Peter Nijkamp, Aura Reggiani
    Abstract:

    Self-Organised Criticality (SOC) is a concept developed over the last decade from dynamic systems analysis that aims to investigate the transition trajectories of evolutionary systems. The main emphasis in SOC is on the analysis of the impact of slow exogenous forces in combination with strong localised interactions between single elements or components of the systems concerned, with particular regard to the attainment of a critical state at the macro-level. Against this background, SOC serves to identify the critical conditions from the internal dynamics of the systems that lead to major and significant transformations of their behaviour. The present paper aims to offer insights and reflections originating from the SOC concept, as well as to explore its potential contribution to understanding the evolution of Regional economic patterns, in particular the functioning of Regional Labour Markets. In our study, the evolutionary dynamics of employment at a district level in West Germany as well as in the combined West and East German setting will be investigated, in order to detect the possible existence of a power law distribution of growth rates, which may be seen as an indication for SOC at the macro-economic level. In this context, SOC may help to explain the presence of large socio-economic Regional fluctuations in a country, and, in general, the dynamics inherent to Regional development.

Dominique M. Gross - One of the best experts on this subject based on the ideXlab platform.

  • temporary foreign workers and Regional Labour Market disparities in canada
    Canadian Public Policy-analyse De Politiques, 2012
    Co-Authors: Dominique M. Gross, Nicolas Schmitt
    Abstract:

    Temporary foreign worker programs are typically seen as short-term solutions to shortages of Regional or occupational Labour. During the past decade, Canadian regions experienced unequal economic growth, and some suffered from significant excess Labour demand. The Canadian Temporary Foreign Worker Program was thus expanded and conditions to access it made easier. During the same period, the pattern of Regional disparities in unemployment rates became more persistent. This paper shows that some of the persistence is due to the increased availability of temporary foreign workers. This suggests that policy makers did not price them correctly to avoid adverse effects on the Canadian Labour Market.

  • temporary foreign workers and Regional Labour Market disparities in canada
    2009
    Co-Authors: Dominique M. Gross
    Abstract:

    Temporary foreign worker programmes are seen as short-term solutions to shortages of Regional or occupational Labour. During the past decade, Canada experienced unprecedented economic growth and some regions appeared to suffer from acute Labour shortages. The country’s temporary foreign worker programme was thus expanded to include all types of low-skill workers and access by employer was made easier. During the same period, wide Regional discrepancies in unemployment rates persisted as the adjustment mechanism for convergence in Regional Labour Markets did not seem to function. This paper shows that some of the persistence is due to increased availability of temporary foreign workers suggesting they are not priced correctly to avoid adverse effects on the Canadian Labour Market.

  • Impact of immigrant workers on a Regional Labour Market
    Applied Economics Letters, 2004
    Co-Authors: Dominique M. Gross
    Abstract:

    This article analyses the ability of a Regional Labour Market to absorb growing flows of immigrant workers with declining levels of skills in relatively high unemployment times. In the short-run, unemployment increases with larger immigration flows, however, in the longer run, unemployment is permanently lowered. The level as well as the composition of skills of immigrant workers matter. Increasing the discrepancy between the skill distribution of immigrants and that of the existing workforce is desirable to mitigate some of the adverse effects on unemployment in the short run as both types of Labour appear to be complement. Strengthening the existing screening system for immigrant candidates is then a possibility.

Timo Mitze - One of the best experts on this subject based on the ideXlab platform.

  • ageing shocks and short run Regional Labour Market dynamics in a spatial panel var approach
    Applied Economics, 2018
    Co-Authors: Timo Mitze, Torben Dall Schmidt, Daniel Rauhut, Aki Kangasharju
    Abstract:

    ABSTRACTUsing a flexible spatial panel VAR model for a small-scale Labour Market system, we investigate the dynamic interdependences between changes in the demographic structure and the Labour Market performance of a Regional economy. With a particular focus on ageing shocks, we describe an increase in the share of elderly in Regional population due to exogenous changes in the institutional context, such as pension reforms. The Regional Labour Market implications of an ageing shock are then tested with regard to the effects on employment growth, unemployment and Labour participation rate. Our results based on a sample of 71 Scandinavian regions point to negative Regional Labour Market effects of an ageing shock implying a reduction in employment growth and a temporarily declining Labour participation rate, while the unemployment rate increases. Importantly, spatial spillovers amplify these negative impacts through a marginalization of macro-Regional Labour Markets. As a robustness check, we reverse the ca...

  • Ageing shocks and short-run Regional Labour Market dynamics in a spatial panel VAR approach
    Applied Economics, 2017
    Co-Authors: Timo Mitze, Torben Dall Schmidt, Daniel Rauhut, Aki Kangasharju
    Abstract:

    Using a flexible spatial panel VAR model for a small-scale Labour Market system, we investigate the dynamic interdependences between changes in the demographic structure and the Labour Market performance of a Regional economy. With a particular focus on ageing shocks, we describe an increase in the share of elderly in Regional population due to exogenous changes in the institutional context, such as pension reforms. The Regional Labour Market implications of an ageing shock are then tested with regard to the effects on employment growth, unemployment and Labour participation rate. Our results based on a sample of 71 Scandinavian regions point to negative Regional Labour Market effects of an ageing shock implying a reduction in employment growth and a temporarily declining Labour participation rate, while the unemployment rate increases. Importantly, spatial spillovers amplify these negative impacts through a marginalization of macro-Regional Labour Markets. As a robustness check, we reverse the causal ordering and analyze the responses to a positive macroeconomic shock which initially increases employment growth. We find direct and spatially indirect adjustment patterns characterized by a reduction of the unemployment rate, an increase in the Labour participation rate and a decrease in the share of elderly in the population.

  • internal migration Regional Labour Market dynamics and implications for german east west disparities results from a panel var
    Jahrbuch für Regionalwissenschaft, 2010
    Co-Authors: Björn Alecke, Timo Mitze, Gerhard Untiedt
    Abstract:

    This paper analyses the causal linkages between Regional Labour Market variables and internal migration flows among German states between 1991–2006. We adopt a Panel VAR approach to identify the feedback effects among the variables and analyse the dynamic properties of the system through impulse-response functions. We also use the model to track the evolution of the particular East-West migration since re-unification aiming to shed more light on the East German ‘empirical puzzle’, characterized by lower migration responses than expected from the Regional Labour Market position relative to the West. Indeed we get evidence for such a puzzle throughout the mid-1990s, which is likely to be caused by huge West-East income transfers, a fast exogenously driven wage convergence and the possibility of East-West commuting. However, we also observe an inversion of this relationship for later periods: That is, along with a second wave of East-West movements around 2001 net flows out of East Germany were much higher than expected after controlling for its weak Labour Market and macroeconomic performance. Since this second wave is also accompanied by a gradual fading out of economic distortions and a downward adjustment of expectations about the speed of East-West convergence in standard of livings, this supports the view of ‘repressed’ migration flows for that period.

  • Internal Migration, Regional Labour Market Dynamics and Implications for German East-West Disparities – Results from a Panel VAR
    2009
    Co-Authors: Björn Alecke, Timo Mitze, Gerhard Untiedt
    Abstract:

    This paper analyses the causal linkages between Regional Labour Market variables and internal migration flows among German states between 1991-2006. We adopt a Panel VAR approach to identify the feedback effects among the variables and analyse the dynamic properties of the system through impulse-response functions. We also use the model to track the evolution of the particular East-West migration since re-unification aiming to shed more light on the East German empirical puzzle, characterized by lower migration responses than expected from the Regional Labour Market position relative to the West. We indeed get evidence for such a puzzle throughout the mid-1990s, which is likely to be caused by huge West-East income transfers, a fast exogenously driven wage convergence and the possibility of East-West commuting. However, we also observe an inversion of this relationship for later periods: That is, along with a second wave of East-West movements around 2001 net flows out of East Germany were much higher than expected after controlling for its weak Labour Market and macroeconomic performance. Since this second wave is also accompanied by a gradual fading out of economic distortions, this supports the view of repressed migration flows for that period.

  • internal migration Regional Labour Market dynamics and implications for german east west disparities results from a panel var
    2009
    Co-Authors: Björn Alecke, Timo Mitze, Gerhard Untiedt
    Abstract:

    This paper analyses the causal linkages between Regional Labour Market variables and internal migration flows among German states between 1991-2006. We adopt a Panel VAR approach to identify the feedback effects among the variables and analyse the dynamic properties of the system through impulse-response functions. We also use the model to track the evolution of the particular East-West migration since re-unification aiming to shed more light on the East German empirical puzzle, characterized by lower migration responses than expected from the Regional Labour Market position relative to the West. We indeed get evidence for such a puzzle throughout the mid-1990s, which is likely to be caused by huge West-East income transfers, a fast exogenously driven wage convergence and the possibility of East-West commuting. However, we also observe an inversion of this relationship for later periods: That is, along with a second wave of East-West movements around 2001 net flows out of East Germany were much higher than expected after controlling for its weak Labour Market and macroeconomic performance. Since this second wave is also accompanied by a gradual fading out of economic distortions, this supports the view of repressed migration flows for that period.

Peter Huber - One of the best experts on this subject based on the ideXlab platform.

  • The Institutional Pre-conditions for Regional Labour Market Policy Making in the EU: Case Studies and Policy Conclusions. WWWforEurope Working Paper No. 70
    2014
    Co-Authors: Peter Huber
    Abstract:

    Based on questionnaires conducted among PES organisations as well as Pacts and LEIs in 40 cities of 12 EU countries and 2 non-EU member countries we take stock of the preconditions for conducting local Labour Market policies in an urban context in Europe and analyse the development of both Regional PES organisations as well as Pacts/LEIs in the time since the economic crisis of 2008. Our findings suggest that the most effective measures to foster partnership based Regional Labour Market approaches in the EU would consist of: 1. increasing budgetary autonomy of the Regional level of Labour Market policy institutions and aligning their competencies in other fields of Labour Market policy to the results that are expected from them; 2. investing in the development of partnership based policy institutions such as territorial employment pacts of local employment initiatives both in terms of the number of actors and their structure; 3. increasing the problem solution capabilities of Regional actors by providing additional information in terms of evaluation and monitoring results with respect to policy measures and the Regional Labour Market situation.

  • The Institutional Pre-Conditions for Regional Labour Market Policy Making in the EU: Case Studies and Policy Conclusions
    SSRN Electronic Journal, 2014
    Co-Authors: Peter Huber
    Abstract:

    Based on questionnaires conducted among PES organizations as well as Pacts and LEIs (Pacts/LEIs) in 40 cities of 12 EU member states and 2 non-EU member states – we take stock of the preconditions for conducting local Labour Market policies in an urban context in Europe and analyse the development of both Regional PES organisations as well as Pacts/LEIs in the time since the economic crisis of 2008. Our findings suggest that the most effective measures to foster partnership based Regional Labour Market approaches in the EU would consist of: a.) Increasing budgetary autonomy of the Regional level of Labour Market policy institutions and aligning their competencies in other fields of Labour Market policy to the results that are expected from them, b) Investing in the development of partnership based policy institutions such as territorial employment pacts of local employment initiatives both in terms of the number of actors and their structure, d) Increasing the problem solution capabilities of Regional actors by providing additional information in terms of evaluation and monitoring results with respect to policy measures and the Regional Labour Market situation. In addition, the European Commission should on the one hand aim to raise awareness among national and Regional policy makers on the benefits of decentralisation and devolution for Regional Labour Market policy and to provide know-how and potentially also tools, sufficiently flexible to accommodate for the potentially widely varying needs of different local initiatives, for data generation, monitoring and evaluation. National governments, by contrast, should on the one hand aim to improve the vertical co-ordination of Regional Labour Market policies by using best practice management tools of new public management in PES organisations and take an active role as a partner in Pacts/LEIs. They should also align the vertical distribution of formal competencies for Labour Market policy making in their respective countries with the tasks of (and the results expected from) Regional policy organisations. From the perspective of the Regional organisations, in particular this last point seems to be of major importance, since it is also considered to be the most important impediment to effective Regional Labour Market policy making by them.

  • Regional Labour Market Disparities in an Enlarged European Union
    Regional Diversity and Local Development in the New Member States, 2009
    Co-Authors: Peter Huber
    Abstract:

    We characterise Regional Labour Market problems in the EU 27 using disaggregate data on Regional employment, unemployment and participation rates, by gender and 10-year age groups at the NUTS-2 level. We ask whether accession changed disparities in Regional Labour Market conditions and to what degree the structure of employment, unemployment and participation rates in the 12 new member countries differs from the EU 15. We find that aggregate Labour Market disparities are comparable between the two country groups but that there are important structural differences. Performing a basic components analysis we find that five principal components (four of which are associated with the structure of employment and participations rates) explain around 90 percent of the variance in the data. Cluster analysis suggests that new member country regions are most similar in structural Labour Market characteristics to many German and French NUTS-2 regions. Regression analysis suggests that the correlates of aggregate Regional employment and unemployment rates between the two groups do not differ dramatically but that there may be some differences with respect to employment rates of individual demographic groups.

  • Regional Labour Market developments in transition a survey of the empirical literature
    European Journal of Comparative Economics, 2007
    Co-Authors: Peter Huber
    Abstract:

    We summarize the empirical literature on Regional Labour Market development in transition. This literature suggests that transition has been associated with increased Regional disparities and there is some indication of polarisation. Capital cities and regions closer to EU-borders developed better and increased integration has also contributed to divergence. Spill-overs within countries, however, tend to be small. Regional disparities are also unlikely to diminish through migration, wage flexibility and capital mobility. Migration is lower in most transition economies than in the EU and capital mobility tends to reinforce existing Regional disparities. Only wage flexibility is higher than in most European Labour Markets.

  • Regional Labour Market developments in transition a survey of the empirical literature
    European Journal of Comparative Economics, 2007
    Co-Authors: Peter Huber
    Abstract:

    Abstract We summarize the empirical literature on Regional Labour Market development in transition. This literature suggests that transition has been associated with increased Regional disparities and there is some indication of polarisation. Capital cities and regions closer to EU-borders developed better and increased integration has also contributed to divergence. Spill-overs within countries, however, tend to be small. Regional disparities are also unlikely to diminish through migration, wage flexibility and capital mobility. Migration is lower in most transition economies than in the EU and capital mobility tends to reinforce existing Regional disparities. Only wage flexibility is higher than in most European Labour Markets. JEL Classification: P25, R23, P23 Keywords: Regional Labour Markets, Transition 1. Introduction Over the past decade the transition countries experienced significant structural change due to transition to a Market economy and increased integration in the world economy. In virtually all of these countries this led to a substantial increase in Regional disparities. Starting from a situation of an extremely equal distribution of economic activity as measured for instance by employment rates and wages during socialism, these economies developed Regional disparities which parallel or even exceed those of many European economies. This development raises a number of issues relating to the causes for Regional disparities, the efficiency of Labour Market mechanisms such as wage flexibility, migration and new firm creation in equilibrating Regional Labour Markets and appropriate policies to deal with the uneven development of regions in transition. Assessing Labour Market conditions, as well as the ability of Labour Markets in transition countries to deal with Regional disparities, is of primary importance from an economic point of view, because Regional mismatch of workers and work opportunities may be a cause of high and persistent unemployment and because in many countries substantial funds are devoted to subsidising poorer regions with the aim of reducing Regional disparities. Thus understanding the workings of Regional Labour Markets in transition may be an important contribution to combating national unemployment and may help to increase the efficiency of Regional as well as Labour Market policy. Furthermore, with the accession of a number of transition countries to the European Union (EU) additional issues arise. These concern the use and administration of EU structural funds, the optimal timing of accession to the European Monetary Union and the end of derogation periods for freedom of movement of Labour and services. Analysing Regional developments in the new member states can contribute to a better understanding of each of these issues. For instance, analysing Regional Labour Market adjustment mechanisms can provide insights on the flexibility of Labour Markets, which is important for an assessment of the viability of a monetary union as well as of the appropriate structural funds policy. In addition, high and persistent Regional disparities may have repercussions which go far beyond narrow economic analysis, which may reach as far as the disintegration of existing countries.2 Thus understanding the causes and potential remedies of Regional disparities is also of a wider political importance. Finally, from an analytical point of view, the experience of the transition economies of Central and Eastern Europe and the former Soviet Union provides an opportunity to analyse the workings of nascent Market economies. In these economies in the last one and a half decades a Market system was gradually developed from a centrally planned system. This was accompanied by output decline, resource reallocation, trade reorientation and institutional reforms (see: Campos and Coricelli, 2002). As a consequence transition economies provide a natural testing ground to address some of the central questions of Regional economics such as the role of institutions in Regional development, the effects of trade re-orientation and globalisation on location of economic activity and on the capability of Regional economies to adjust to increasing Regional disparities. …