Regional Unemployment, Productivity and Trade in Italy, Europe and the Us

The existence and persistence of large spatial disparities in unemployment within national economies is a central issue in regional economics. Previous empirical analyses have largely disregarded the role of fundamentals. On the contrary in this paper we explore the link between labour productivity, international trade and regional unemployment differentials. We base our empirical analysis on the predictions of a General Oligopolistic Equilibrium efficiency-wage trade model. Using nonparametric regression methods, we give evidence of a non-linear negative relationship between labour productivity and regional unemployment, in the cases of Italian and European regions, and of an not significant weakly positive and quasi-linear relationship between unemployment rates and labour productivity in the US States. Even if the role of international market access is taken into account using Italian and US data on export propensity – the dichotomy among Europe and the US remains a fact.