The Annals of Regional Science

, Volume 62, Issue 3, pp 601–635 | Cite as

Employment in Spanish regions: cost-control or growth-enhancing policies?

  • Roberto BandeEmail author
  • Marika Karanassou
  • Héctor Sala
Original Paper


The sets of relatively high and low unemployment regions have not changed in decades. Since generic labour market reforms have been fruitless on this respect, we explore whether such groups of regions react differently to key drivers of employment and wage setting. We find that while the more developed regions respond to labour share and investment innovations, employment in the more lagging regions is mainly led by capital accumulation. Our results give support to a place-based strategy of regional development, call for more region-specific policies and discard standard labour market reforms as a unique tool to manage the unemployment rate problem.

JEL Classification

R11 E24 E22 J23 J31 



Héctor Sala is grateful to the Spanish Ministry of Economy and Competitiveness for financial support through grant ECO2016-75623-R. Roberto Bande acknowledges financial support from Xunta de Galicia, through grant ED431C 2017/44. Authors acknowledge very useful comments and suggestions from two anonymous referees.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Faculty of Economics and Business Administration, GAME-IDEGAUniversidade de Santiago de CompostelaSantiago de CompostelaSpain
  2. 2.School of Economics and Finance, Queen MaryUniversity of LondonLondonUK
  3. 3.IZABonnGermany
  4. 4.Departament d’Economia AplicadaUniversitat Autònoma de BarcelonaBellaterraSpain

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