Productivity and employment in high skilled sectors
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Date
2026-09-03
Authors
Μπαλαχάμης, Χαράλαμπος
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Abstract
This thesis investigates whether localized high-technology employment acts as an independent, causal driver of regional labor productivity across the European Union, or if observed premiums merely re ect the endogenous spatial sorting of technology firms into already-prosperous hubs. Utilizing a comprehensive unbalanced panel dataset of 232 NUTS-2 regions across 27 EU member states from 2000 to 2023, the study employs a stepwise Ordinary Least Squares (OLS) Two-Way Fixed Effects (TWFE) framework paired with a Two-Stage Least Squares (2SLS) Bartik shiftshare instrumental variable approach to isolate exogenous labor demand shocks.The aggregate empirical results reveal a substantial, continent-wide causal productivity dividend: a one-standard-deviation exogenous increase in localized HighTechnology Sector (HTC) employment directly causes a 0.110 standard deviation increase in regional labor productivity, with similar robustness confirmed for broader Information and Communication Technology (ICT) sectors. However, spatial heterogeneity analysis uncovers a profound structural divide. While the advanced Western European core extracts a highly significant causal tech premium, this premium collapses entirely to zero in the Eastern and Southern peripheries once reverse causality is stripped away.
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Keywords
Causal inference, Bartik instrument (Shift-Share), Two-way fixed effects (TWFE), Two-stage least squares (2SLS), Regional economics, Labor productivity, High-technology employment, Spatial heterogeneity, Endogenous spatial sorting, European union (NUTS-2), Core-periphery divide