The tyranny of regional unemployment rates

Abstract

Although there is a substantial body of literature on labour market analysis, most of it ignores the spatial dimension of the labour market. A spatial perspective in analysing labour market processes is important for several reasons. FIRST, labour markets are by no means as homogeneous as conventional labour market theories assume. SECOND, most countries are displaying strong regional variations in the dynamics of unemployment. THIRD, geographical space exerts a frictional effect on labour market processes. Regional unemployment rates appear to be the most important indicators for analysing labour market processes from a spatial perspective. The paper aims to discuss some of the problems that are associated with the use of regional unemployment rates. We will focus attention on conceptual problems, problems of data quality and on some of the new problems that have arisen due to the widespread use of new computer technology. Solutions to many of the problems are obvious, but many of the new problems will require some extra effort for their solution. The tyranny that threatens the research community is that regional unemployment data exercise a power over us that can lead the naive to misinterpretations. The data may mislead even the most righteous among us. A good deal of research effort is often given to overcome the tyranny that is found in the columns and rows that the lay public likes to call statistics. The discussion will be enriched by means of a study utilizing regional unemployment rates at the district level in West Germany