Gloria Cicerone, Philip McCann, Viktor Venhorst (p)

Niklas Rudholm

Relatedness is an activity-specific and place-specific index which measures the connectedness of an activity to an economy. The standard relatedness index represents an unreliable input for strategic decisions but, as defined, it may leave out much of the strong connections which are crucial for meaningful estimation of the feasibility of transitions to new potential activities. We propose a powerful correction of the index which enables to consider the whole region’s economic structure and all the activities’ connections, including those linking underdeveloped - but potentially crucial - activities. Our results confirm our hypothesis according to which our adaptation of the existing index not only better captures the relatedness of potential activities to the regional economy, but also outperforms the original index much more in high-income regions (evidence in space) and in recent years (evidence in time).

Simón Sánchez-Moral (p), Alfonso Arellano (p)

Viktor Venhorst

The severe shortfall of various essential products to fight coronavirus (i.e. face-masks, medical equipment and supplies, hydrogel solutions), especially in countries heavily dependent on external markets for some of these product like Spain, could courage firms to adopt diversification strategies towards the fabrication of essential COVID-19 products. The government response, which included the subsidizing of the production and changes in the certification procedures affecting health products, facilitated the process. The objective of this research is to contribute to the understanding of the role of technological relatedness between activities in the diversification strategies of Spanish firms. We modeled the employment transitions in a sample of more than one million workers in order to estimate the skill-relatedness between Spanish industries. We used the information of the Continuous Sample of Working Histories compiled by the Spanish Social Security office. This is a set of anonymous microdata obtained from a random non-stratified sample. The data of the ‘industrial space’ resulting from this analysis is used to measure the influence of relatedness in the manufacturing of the different essential COVID-19 products groups. The different criteria and procedures applied to estimate the skill-relatedness ratios, as well as the robustness issues and preliminary results at regional level are discussed.

Milene Tessarin (p), Deyu Li, Sergio Peralia, Ron Boschma

Simón Sánchez-Moral

This study evaluates the opportunities for regional diversification in Europe over the last decade. We use microdata from the European Labour Force Survey to empirically test the entry and exit of occupational specializations at the regional level. Our results show that NUTS 2 regions are more likely to diversify into new occupations related to their existing local labour markets. So, the new opportunities for diversification are path-dependent, that is, they depend on the previous occupational structure of the regions. Relatedness is especially important for diversifying toward complex occupations, thus increasing the potential economic benefits of the regions. However, there are significant regional heterogeneities in this related diversification process. Relatedness is positively associated with occupational specialization but loses strength as GDP per capita increases among European regions.

Kenneth Carling, Charlie Lindgren, Niklas Rudholm (p)

Milene Tessarin

In recent years, the use of price comparison websites has increased substantially. Cross-border retailing has also been increasing, at least until the advent of COVID-19. If markets become more integrated due to increased cross-border trade, and if increased use of price comparison websites increases the frequency of price changes and reduces retail margins, this could potentially make markets more susceptive to aggregate economic chocks (Gorodnichenko and Talavera, 2017; Cavallo, 2018).

Previous studies regarding the macroeconomic effects of increased use of online markets are mainly from the U.S. There are, however, several reasons why the situation in Europe could be different. One difference is that while U.S. states share a single language, there are 24 official languages spoken in the European Union, making cross-border trade more difficult. In addition, although the introduction of the EURO has reduced the number of currencies, several countries in the north of Europe has opted out of the EURO. Of the seven countries in our study (Denmark, Norway, New Zeeland, Finland, France, Sweden, and Great Britain), only Finland and France have adopted the EURO. Another difference between the U.S. and Europe is in the propensity to migrate as a response to economic chocks, and although American state-to-state migration as a response to economic chocks is declining (Molloy et al., 2011; Beyer and Smets, 2015), migration is still more common between U.S. states than between European countries (Beyer and Smets, 2015).

All these differences could make the impact of increased market integration using online marketplaces and price comparison websites have a different impact on macroeconomic stability in Europe as compared to the U.S. As such, the goal of our research is to study pricing by retailers marketing their products through the price comparison website PriceSpy in seven different national markets, six of which are in Europe. We aim to answer the following questions; Firstly, what is the frequency of price changes for online retailers in the seven different markets, and is there a tendency toward an increase in the frequency of price changes during the period under study? Secondly, what is the within-country price dispersion for identical products in the seven markets, what is the between-country price dispersion, and how have this changed during the study period? Thirdly, what is the degree and timing of exchange rate pass-through in these seven markets, and how does it compare to previous findings form the U.S.?