REGIONAL DIVERGENCES IN WESTERN EUROPE. SKILL CONVERGENCE AND REGIONAL RESPONSES TO SOCIO-ECONOMIC CHANGE.

Abstract

The first section of the thesis provides a sequence of theories and models by regional economics come over the last fifty years. Locational theory, regional growth and local development theories, give us understanding to the role of “space”, that is included as an economic resource of the “territory” in which firms are situated and generate advantages. By the patent distribution analysis, it is evident that agglomeration economies are leading city regions through an exponential growth due to positive externalities, and it is causing an opposite direction for the less favoured regions which carried problems such as missing knowledge, income inequalities, less incentives to growth and networking. Evidences agreed that inequality among European Union’s regions has turned considerably up at the early 2000, after having fallen in the 1990s from the previously high-level period. The less favoured regions, such as small and medium-sized manufacturing cities and regions, have suffered employment and income. On the other hand, the more favoured regions, large metropolitan areas, are now up to the positive wave of good income and employment. Since the 2000s, complex technology has an important role in urban agglomeration, but does not take the place of some (tacit) knowledge embodied in social network. This concept explains the role of human capital, which due to complex economic and consequently growth economic. The second part of the thesis provides an empirical analysis concerning the differential evolution of skills migration by unit of metropolitan statistical area (MSA), which is ranked by high-skill workers over low-skill workers, in the period of time 2000-2010. The empirical study is inspired by a different in differences analysis by Giannone (2017). The analysis shows that both the relative price and supply of skill increased since 1980, suggesting an increase in relative demand for educated workers. The literature named Skill-Biased Technical Change (SBTC) this shift in demand, and researchers explain how SBTC led to rise in earning inequalities. These tendencies of development in favours geographical concentration of the best jobs and high skills, have confirmed the divergence through EU regions. On one side, metropolitan regions are the fundamental motors of European’s overall prosper. By the other side, periphery regions are on their way of declining prosperity and lack of real opportunity, which is not only economically inefficient, but also socially and politically dangerous. The third section of the thesis look at the “Great Divergence” (Moretti, 2012) in a way to observe the agglomeration and SBTC effects which leads to a spatial wage convergence decreased. Many cities and regions across Europe’s economic peripheries have been stuck in a low- development trap. As few researchers questioned, does it mean that policy should react and focus on equity instead of agglomeration? According to Rodríguez-Pose (2017), weak institutions and poor-quality government are crucial obstacle to development. Instead, the capability to generate prosperity and maximizing the territorial potential to generate and share positive externalities, is an attitude which differs trough regions and, even more, countries. Place-sensitive distributed development policies (PSDDP) refer to an innovative development policy approach which remain sensitive to the characteristics, features and conditions of every territory. Different development regions require different policy approaches.The study case takes into observation Italy, with focus on North/South regions behaviour, and Germany in a wide sense and with refer to later developed German Democratic Republic regions.To better understand the migration of high skill since their initial skill ratio, it is investigated which role institutions have in the process, especially in education system, with a focus on Italian central unit system and German autonomous regional system.