Ž . Labour Economics 5 1998 25–51 Regional unemployment persistence ž / Spain, 1976–1994 Juan F. Jimeno a,b, ) , Samuel Bentolila c a UniÕersidad de Alcala de Henares, Madrid, Spain ´ b FEDEA, Jorge Juan 46, 28001 Madrid, Spain c CEMFI, Madrid, Spain Received 12 June 1996; revised 15 August 1996 Abstract This paper examines the degree of persistence of regional relative unemployment. A theoretical model is built to explain the role of migration, labor force participation, and real wage flexibility at the regional level, in determining such persistence. The model is used to account for the observed degree of persistence of regional relative unemployment in Spain, as compared to the US and the European Union, also providing new estimates on real wage flexibility in Spanish regions. q 1998 Elsevier Science B.V. JEL classification: E24; J61 Keywords: Regional labor adjustment; Unemployment persistence 1. Introduction High unemployment is very persistent in Europe: without having suffered large Ž . new shocks, in the mid-1990s many European Union EU countries remain stuck at unemployment rates close to the peaks attained after the supply shocks of the 1970s and the demand shocks of the first half of the 1980s. In contrast, in the United States the unemployment rate is now back to the levels of the 1960s. The persistence of unemployment is usually related to labor market institutions yielding wage rigidity and employment inertia, and to labor force dynamics. ) Ž . Ž . Corresponding author. Tel.: q34 1-4350401; fax: q34 1-5779575; e-mail: jimeno@fedea.es. 0927-5371r98r$19.00 q 1998 Elsevier Science B.V. All rights reserved. Ž . PII S0927-5371 96 00019-X