40th Congress of the European Regional Science Association Barcelona THE EFFECTS OF AGGREGATE FLUCTUATIONS ON REGIONAL ECONOMIC DISPARITIES IN FINLAND

This paper investigates the evolution of regional disparities in Finland between 1988 and 1997. The analysis focuses on per capita GDP and its subcomponents, particularly labour productivity and employment. The results show, first, that the evolution of both labour productivity and employment rate account for regional divergence of per capita GDP during 1990-1995. Second, as far as productivity is concerned, private services contribute the most to the divergence of per capita GDP, whereas primary production is the main convergent sector. Third, the divergence of regional productivity in a sector does not necessarily contribute to regional divergence of overall per capita GDP. Fourth, even though inter-regional migration tends to have convergent effects on regional per capita GDP levels, its effect was not strong enough during 1990-1995: GDP divergence dominates. Finally, while the aggregate measures point to economic recovery as early as in 1994, at the regional level the recession lasted two years longer