Withdrawing State? Spatiotemporal Geography of State Employment in Finland

Abstract Using a novel dataset, we examine whether state jobs have centralised away from rural municipalities to larger cities in Finland, and how this process has affected regional disparities. Additionally, we test whether the centralisation of state jobs reflects state withdrawal or an adaptation to population decline. Our methodological approach combines descriptive statistics with Granger causality tests. The findings reveal that the distribution of state jobs has become increasingly uneven as they are centralising in the largest cities. The increasing spatial inequality in the job distribution is significantly more pronounced in the state sector than in the municipal and private sectors. Furthermore, changes in state employment rarely reflect an adaptation to population decline. Rather, state withdrawal more likely exacerbates than alleviates distress in certain (particularly rural) municipalities. These findings highlight the importance of state employment for rural development.