# 13-166/VIII (2013-10-11; 2013-10-31)

Author(s)
Stilianos Alexiadis, Ministry of Rural Development & Foods, Athens, Greece; Konstantinos Eleftheriou, University of Piraeus, Greece; Peter Nijkamp, VU University Amsterdam
Keywords:
Regional inequalities, human capital, technological progress, search & matching
JEL codes:
J24, J61, R10

This paper aims to provide a conceptual and operational context for analysing regional inequalities. It does so by utilizing a ‘search & matching’ framework. The model, developed in this paper, maps the way in which individuals are distributed according to: 1) the abilities of individuals to perform certain, specified, tasks; and 2) the degree of regional specialization. The impacts of advances in information technology are examined explicitly in this model. While the relevant theoretical and empirical literature analyses the impact of technological progress with respect to changes in regional productivity, the present model takes an alternative perspective. This model is focused, explicitly, upon changes in the arrival of job offers and employment opportunities. The way in which individuals decide about employment, as an aftermath of changes in information technology, is constructed using the aforementioned framework. Consequently, this approach provides an account for the distribution of ‘human capital’ (from the perspective that individuals acquire jobs in sectors in which they are more productive) across regions, and, by extension, for the persistence of regional inequalities. Regional inequalities are attributed to possible mismatches, leading individuals to accept job offers from sectors in which they are less productive. Simulation experiments, then, complement the theoretical framework, while some preliminary empirical evidence using a sample of NUTS-2 and NUTS-3 regions in Europe, is also presented.