Why are regional unemployment differentials in Europe so persistent if, as the wage curve literature demonstrates, there is no compensation in labour markets? We hypothesize that workers in high-unemployment regions are compensated in housing markets. Modelling regional unemployment...

We investigate the interaction of regional population and employment in a simultaneous model, allowing for interregional commuting. The proposed dynamic specification distinguishes between short-run and equilibrium adjustment effects and it encompasses the lagged-adjustment specification that is...