Regional labour force participation across the European Union: a time-space recursive modelling approach with endogenous regressors

Sol Maria Halleck Vega*, J.P. Elhorst

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

8 Citations (Scopus)

Abstract

Regional labour force participation across the European Union: a time–space recursive modelling approach with endogenous regressors. Spatial Economic Analysis. Although there is an abundant regional labour market literature taking a spatial perspective, only a few studies have explored extending the analysis of labour force participation with spatial effects. This paper revisits this important issue, proposing a time–space recursive modelling approach that builds on and appraises Fogli and Veldkamp’s methodology from 2011 and finding for the United States that participation rates vary with past values in nearby regions. Major shortcomings in their study are corrected for, including stationarity and the control for endogenous regressors other than the time and space–time-lagged dependent variable using system generalized method of moments (GMM). The paper also highlights interaction effects among explanatory variables for the first time in this context. Using a panel of 108 regions across the European Union over 1986–2010, the results for total, male and female participation rates throw a new light on the socio-economic relevance of different determinants. Importantly, characteristics in neighbouring regions play a significant role, and neglecting endogeneity is found to have serious consequences, underlining increased attention on the specification and estimation of spatial econometric models with endogenous regressors.
Original languageEnglish
Pages (from-to)138-160
JournalSpatial Economic Analysis
Volume12
Issue number2-3
DOIs
Publication statusPublished - 2017
Externally publishedYes
Event14th International Workshop on Spatial Econometrivcs and Statistics - Paris, France
Duration: 27 May 201528 May 2015

Keywords

  • labour force participation
  • European Union regions
  • dynamic spatial panels
  • endogenous regressors
  • panel-data models
  • spatial econometrics
  • market participation
  • unemployment
  • women
  • rates
  • disturbances
  • restrictions
  • estimators
  • dependence

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