Unemployment in Regional Labor Markets: Using Structural Theories to Understand Local Jobless Rates in West Virginia

The author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment. Four theories of regional structural unemployment are presented, and their hypotheses are statistically evaluated using West Virginia county panel data. The author then presents case study evidence to compare these statistical results with the realities of the county labor markets. Both types of empirical evidence suggest that a segmented non-market-clearing model, in which structural unemployment stems from queuing for above-market-clearing wages in both a high-wage primary sector and a lower-wage secondary sector, can shed the most light on regional unemployment rates in West Virginia.