The persistence of regional unemployment: evidence from China

The purpose of this paper is to examine the persistence of regional unemployment and to explore the sources of this persistence. Evidence from China suggests three empirical findings. First, provincial relative unemployment is more persistent than aggregate unemployment. Second, youth unemployment is less persistent than total unemployment. Third, although the western region has the highest provincial unemployment rate, it has the lowest persistence of regional unemployment. To explore the sources of this unemployment persistence, a panel data method has been developed based on the Barro Approach and Edwards’ work. The higher the share of industry output by state sector and collective sector, the more the regional unemployment persistence. The private sector is the main employment destination for jobless now and has acted to reduce unemployment persistence.