Policy responses to regional unemployment:Lessons from Germany, Spain and Italy

The paper examines the causes of high regional unemployment in Germany, Spain and Italy, and identifies a number of areas where policy action is needed. Lower unemployment rates will not only depend on stability-oriented macroeconomic policies and a sufficiently flexible labour market, but also on moves towards: more decentralised wage bargaining systems; efforts to reduce regions' long-term dependency on fiscal transfers; changes in tax-benefit systems to improve incentives to create and take up jobs; efficient public expenditure on physical and human capital; action to reduce obstacles to labour mobility. Paper by S. Davies and M. Hallet