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How Provincial is your Region? Effects on Labour Productivity and Employment in Europe
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How Provincial is your Region? Effects on Labour Productivity and Employment in Europe

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  • Alfonso Gambardella
  • Myriam Mariani
  • Salvatore Torrisi

Abstract

This paper estimates the determinants of labour productivity and employment in European NUTS2 regions. We focus on technological capabilities (proxied by regional patents), agglomeration economies (employment density), and openness, proxied by the number of airplane passengers embarked and disembarked in the region. We employ 1989-1996 data drawn from the Eurostat REGIO data base. By using instrumental variables, we confirm existing results in the literature that patents and employment density affect labour productivity. Our novel finding is that openness affects labour productivity as well. This suggests that regional advantages also stem from the ability of the regions to connect to the world that is outside them, and not just on internal factors like local infrastructures, local networks, etc.. In addition, we find that technological capabilities affect employment, while the effect of agglomeration economies and openness on the latter is less marked. Thus, technology seems to be the crucial variable for a thorough regional development. Agglomeration economies and openness benefit mostly those who are already employed, as it implies increases in their incomes with limited increases in employment.

Suggested Citation

  • Alfonso Gambardella & Myriam Mariani & Salvatore Torrisi, 2001. "How Provincial is your Region? Effects on Labour Productivity and Employment in Europe," LEM Papers Series 2001/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2001/04
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    2. Thomas Barnebeck Andersen & Carl-Johan Dalgaard, 2006. "Cross-Border Flows of People, Technology Diffusion and Aggregate Productivity," DEGIT Conference Papers c011_006, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Fagiolo, Giorgio & Santoni, Gianluca, 2015. "Human-mobility networks, country income, and labor productivity," Network Science, Cambridge University Press, vol. 3(3), pages 377-407, September.
    4. Thomas Andersen & Carl-Johan Dalgaard, 2011. "Flows of people, flows of ideas, and the inequality of nations," Journal of Economic Growth, Springer, vol. 16(1), pages 1-32, March.

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