Regional employment and population growth: Granger causality tests using panel data

The effect of economic fluctuations, region type and human capital. Traditionally, people are believed to follow jobs, but a contradictory view has also gained popularity. In this study, two methods are used to analyse regional growth in Finland between 1990 and 2010. The results from the conventional regional adjustment model show that people have largely followed jobs, i.e., that regional growth is demand induced. A closer examination suggests, however, that highly educated people drive regional change and that economic fluctuations also have an effect. Another approach, based on the Granger non-causality method in a panel framework, reveals heterogeneity among regions, implying that regional growth is particularly supply induced for large and dynamic city regions.