A short presentation and description of the papers that have been selected from the second workshop of the Regional Studies Research Network on Geographical Localisation, Intersectoral Reallocation of Labour and Unemployment Differentials (GLUNLAB II)) that took place in Rimini, Italy, on May 14th-15th , 2009.Unemployment, local labour markets, regional economics

Gianluigi Pelloni

Theodore Panagiotidis

English

Research Papers in Economics

Review of Economic Analysis 3 (2011) 1-2                                                        1973-3909/2011001 
1 
Guest Editorial 
 
THEODORE PANAGIOTIDIS 
University of Macedonia and RCEA 
 
GIANLUIGI PELLONI 
University of Bologna, Wilfrid Laurier University and RCEA
∗ 
 
A short presentation and description of the papers that have been selected from the 
second workshop of the Regional Studies Research Network on Geographical 
Localisation, Intersectoral Reallocation of Labour and Unemployment Differentials 
(GLUNLAB II)) that took place in Rimini, Italy, on May 14
th-15
th , 2009. 
Keywords: Unemployment, local labour markets, regional economics 
JEL Classifications: R10, R11, F15,  
This special REA issue is the outcome of the second workshop of the Regional Studies 
Research Network on Geographical Localisation, Intersectoral Reallocation of Labour and 
Unemployment Differentials (GLUNLAB II) which was held in Rimini, Italy and organized 
by The Rimini Centre for Economic Analysis (RCEA) and the Department of Economics-
Rimini, University of Bologna. GLUNLAB 2 was a great opportunity for economists, 
econometricians and economic geographers to meet and exchange ideas. The keynote 
speeches were delivered by Gilles Duranton from the University of Toronto and Gerald 
Carlino from the Federal Reserve Bank of Philadelphia.  
Drawing inspiration from a renowned 1960’s song Gilles Duranton has titled his 
contribution “California Dreamin: The feeble case for cluster policies”. In this review and 
assessment of the existing literature and evidence, the author casts fundamental scepticism on 
the case for cluster policy. Good cluster policies entail solving a very difficult co-ordination 
problem on the one hand and on the other require correcting for a number of market failures. 
We know very little about both.  There is no doubt that existing clusters are associated with 
pervasive market failures and that inefficient outcomes are expected in the absence of local 
policies. However, the complex nature of market failures makes it unclear what kind of 
cluster policies should be followed and how.  Even more important, local composition of 
economic activity is an intermediate outcome and not a fundamental driver of prosperity. 
                                                 
© 2011  Theodore Panagiotidis and Gianluigi Pelloni.  Licensed under the Creative Commons 
Attribution - Noncommercial Licence 3.0 .Available at  http://rofea.org. 
 Review of Economic Analysis 3 (2011) 1-2 
  2
Hence clustering is not an easily controllable variable and, as an intermediate outcome, is 
only weakly related to the final objectives of policy-makers. Furthermore, cluster policies 
need to be designed and implemented in very uncertain environments without being captured 
by special interests. Even if the policy-makers could get cluster policies right, the benefits of 
clustering are simply too small empirically to justify significant and sustained efforts towards 
clusters.  So Gilles Duranton can claim that clusters are a complex second-order issue 
wrongly receiving first-order attention and suggest that local policy-makers should stop 
concentrating their efforts on the local production structure and aim instead at a more efficient 
provision of public goods that works for the needs of both residents and local producers. 
Wolfgang Polasek, Wolfgang Schwarzbauer and Richard Sellener examine the 
relationship between human capital and regional growth in the Swiss cantons. They develop a 
regional production function model that takes into account human capital together with spatial 
effects.  The authors’ proxy human capital by two measures: the average years of schooling of 
the workforce and the shares of workers with secondary, post-secondary and tertiary 
education. Their results are sensitive with respect to the used proxy. Empirical evidence does 
not bear out productivity enhancing effects when the average years of schooling measure is 
used. The alternative measure instead shows that the share of academics in the workforce is 
the main component of human capital driving productivity growth in Swiss cantons.  
Tyrowicz and Wojcik examine convergence of unemployment rates in Poland at the local 
level. They examine spatial, structural and distributional correlates of convergence occurrence 
for local labour markets and conclude that convergence pattern of regional unemployment 
rates has, to some extent, spatial dimension. However, inferences based on a nonlinear unit 
root test show that stochastic convergence is a rare phenomenon for the regional 
unemployment rates in Poland. 
Morrissey and O’ Donoghue provide a spatial modelling framework for labour force 
participation (LFP) and income estimation.  The aim of their paper is to use microsimulation 
and alignment techniques to provide representative data on LFP and income distributions at 
the small area level for Co. Galway. Using these techniques to examine distributional 
differences in LFP and income levels, the authors find that LFP alone is not a determining 
factor in wealth generation at the ED level. Instead, occupation and industry type is more 
indicative of income levels rather than LFP alone. These findings could have important 
implications for a wide range of public policies. 
We wish to thank all those who have supported this workshop, namely the Regional 
Studies Association, the Rimini Centre for Economic Analysis, the Faculty of Economics-
Rimini of UNIBO and the University of Macedonia. Last but not least we would like to thank 
the referees of this special issue of  the REA for the high standard of their reports: Yannis 
Georgellis (Bournemouth University), Dimitris Ballas (University of Sheffield), Panagiotis 
Konstantinou (University of Macedonia) and Roberto Patuelli (University of Lugano).  

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