Seventy Years of Dutch Regional Unemployment from a Spatiotemporal Perspective

Abstract This paper examines serial and both local and global cross-sectional dependence of regional unemployment rates in the Netherlands from 1950 to 2021, using a common factor spatial panel data model. A structural break test applied to this model provides significant empirical evidence that after the period 1980–1984 the half-life of an unemployment shock decreased, Dutch provinces became more locally integrated, regional unemployment rates moved more in line with the national unemployment rate and regional disparities in unemployment decreased. This break is attributed to wage restraint and work sharing laid down in the Wassenaar Agreement. This break and the further development of regional unemployment rates since then are set in the context of a number of important developments, including the government’s austerity policy changes and social security reforms, changes in unemployment measurement methods, the transition of employment from agriculture and industry to the service sector and the increased spatial flexibility of the labor force due to the reduction of travel times.