On the geography of unemployment rates and the spatial sorting of workers' schooling

A distinctive feature of unemployment is that its incidence is far from being homogeneously distributed in the territory. Disparities in unemployment rates are not only observed between countries but also between regions within countries. The available evidence indicates that since the early 80s Spain is a country of high unemployment rates, and persistently large regional disparities. In fact, there is a clear spatial divide in regions showing higher than the average rates in the Northeast, and regions with rates below the average in just a few hundred kilometres distance, in the Southwest. In contrast with the previous studies, here we use micro-data for the Spanish NUTS3 regions to explore the relationship between the spatial distribution of individuals? education and regional unemployment rates. We provide novel evidence showing that i) the impact of individual?s education on unemployment largely varies across regions and, ii) regional disparities in the level of educational attainment of the active population explain a big deal of the observed disparities in the regional distribution of unemployment rates, particularly in periods of high unemployment.