Regional Evolutions in Finland

Introduction

The export-led recovery from the great slump of the early 1990s in Finland was characterized by widening unemployment rate disparities -among regions. This development has sparked some interest in regional economics and, in particular, to the regional employment and unemployment dynamics in Finland.

This paper investigates the regional employment and unemployment dynamics in Finland from several different angles. The study is conducted through the use of data from the Finnish labour districts. The paper is built around three themes. The first theme of this paper is the relationship af output and employment from a regional perspective. lt is interesting ta find out whether there indeed exist large disparities in the job-intensivity af regional growth among the Finnish labour districts. Some tentative explanations are aisa offered for the observed disparities in the job­intensivity of regional growth. The second theme of this paper is the long run relationship of regional unemployment rates in Finland. At the beginning of the cointegration analysis the leading and lagging relationship of the Finnish regional unemployment rates is studied by using a standard causality inference in econometrics. The aim of this analysis is to discover possible cointegrating vectors among the regional unemployment rates in Finland and ta identify the speed af adjustment to the long run equilibrium of regional unemployment rates by using a set of error-correction models. The cointegration of regional unemployment rates is studied through the use of the Johansen (1995) procedure. 1 also consider the internal dynamics of Northern Finland. The third theme of this paper is the adjustment of regional labour markets to labour demand shocks in Finland. The adjustment to labour demand shocks can occur through three channels, which are the unemployment rate, the participation rate and interregional migration. This analysis is carried out with a set of vector autoregressive models.

• ISSN: 1236-7184
• ISBN: 952-5071-17-0
• Publication in PDF-format