Regional employment dynamics in the EU: structural outlook, co-movements, clusters and common shocks

This paper considers the evolution of employment across 145 European regions (between 1983 and 1997) at a level of industrial disaggregation greater than that usually considered in the literature, using both shift-share and panel regression techniques. The results highlight the importance of both the regional and the industrial dimensions. National boundaries are not particularly significant in singling out clusters of regions with similar levels of employment growth. What matters is industrial structure: manufacturing employment is correlated better across countries and regions than is aggregate employment, and the most dynamic regions are those in which the development of services is grafted onto a strong manufacturing sector. While the evidence confirms that there is a growing integration among the European regions, it does not corroborate the existence of a core regions located in Northern Europe with more uniform employment dynamics.