The regional distribution of unemployment: What do micro-data tell us?

Regional disparities in unemployment rates are large and persistent. The literature provides evidence of their magnitude as well as of the role of certain factors in explaining the unemployment gap between regions. Most of these studies, however, adopt an aggregate approach and so do not account for the individual characteristics in each region. This paper, by drawing on micro-data from the Spanish wave of the Labour Force Survey, seeks to remedy this shortcoming. An appropriate decomposition of the regional gap in the average probability of being unemployed enables us to distinguish between the contribution of differences in the regional distribution of individual characteristics from that attributable to a different impact of these characteristics.