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Journal of Economic Geography

Spatial Dependence in Local Unemployment Rates

Journal Article
Reference
Patacchini, Eleonora and Yves Zenou (2007). “Spatial Dependence in Local Unemployment Rates”. Journal of Economic Geography 7(2), 169–191. doi.org/10.1093/jeg/lbm001

Authors
Eleonora Patacchini, Yves Zenou

By explicitly considering the spatial dimension of local regional labor markets, we develop a simple dynamic model that explains the spatial correlation between unemployment rates. We then test this model by using UK local data. Our evidence shows a significant spatial dependence that has been growing over time and characterized by a low distance decay. Highly localized effects are explained by commuting flows. These results are consistent with the theoretical model.