Regional Labour Market Developments in Transition: A Survey of the Empirical Literature

Abstract

We summarize the empirical literature on regional labour market development in transition. This literature suggests that transition has been associated with increased regional disparities and there is some indication of polarisation. Capital cities and regions closer to EU-borders developed better and increased integration has also contributed to divergence. Spill-overs within countries, however, tend to be small. Regional disparities are also unlikely to diminish through migration, wage flexibility and capital mobility. Migration is lower in most transition economies than in the EU and capital mobility tends to reinforce existing regional disparities. Only wage flexibility is higher than in most European labour markets.