Heterogeneous labour market trajectories in the EU: convergence, divergence and stagnation across regions

Abstract The scientific objective of this study is to analyse and compare the convergence, divergence, or stagnation of selected regional labour markets indicators in the European Union, employing beta and sigma convergence concepts and the convergence club approach. By analysing seven labour market indicators from the Regional Competitiveness Index, we uncover a complex and heterogeneous landscape of labour market dynamics. Significant beta convergence is observed in three of the seven indicators, while the remaining four display stagnation. However, sigma convergence is not detected in any of the indicators; instead, two show divergence and five exhibit stagnation. Recognizing that these mixed results may stem from the fact that regions belong to distinct “convergence clubs” shaped by path dependency, we separately analyse post-socialist and capitalist regions. The convergence club approach proves useful in interpreting these varied patterns of convergence, divergence and stagnation in EU regional labour markets. Our findings suggest that while certain regions are converging on specific labour market indicators (e.g. gender balance in unemployment, long-term unemployment), others, particularly in terms of overall unemployment rates and labour productivity, are diverging. This underscores the high degree of heterogeneity within EU regional labour markets, driven by structural, institutional and historical factors. The study highlights that labour market convergence is not an automatic process but one that necessitates strategic, long-term interventions. Policy responses must be tailored and sensitive to the unique circumstances and historical trajectories of each region, aiming not only to reduce immediate disparities but to foster sustainable development that aligns with the overarching goals of economic convergence across the European Union.