Intra-national Labour Market Adjustment in the Candidate Countries

This paper analyzes the evolution of regional unemployment rates, wages, participation rates, migration and employment in seven candidate countries for accession to the European Union (EU) in the 1990's. We compare these countries to a core set of EU member states and find persistent regional disparities in both regions. However, persistence of unemployment rates is lower in the first-round candidate countries than in the member states. Furthermore, in both first-round and second-round candidate countries, persistence in participation rates is lower. Migration seems to be an ineffective labor market adjustment mechanism. Wages react more strongly to regional unemployment developments in first-round candidate countries than in member states but they are slightly less responsive to national unemployment.