Employment-output link in Finland : evidence from regional data

This study examines the relation between employment and output using panel data on 452 Finnish municipalities regrouped into 85 areas, representing regions at the so called NUTS4 level in the EU. The results imply that: (i) the contemporaneous relation between changes in employment and output growth disappeared in the early 1990s; (ii) there is evidence of a recovery of this relation in the mid 1990s; (iii) there are differences in the employment-output relation between different regions; and (iv) the existing differences can be partly explained by differences in industrial specialisation.