Regional Unemployment and Employee Loyalty: Evidence from 12 UK Regions

This study investigates the relationship between unemployment and employee loyalty across UK regions. It is argued that higher regional unemployment depresses wages and increases the cost of a potential job loss, thus providing an incentive for employees to be loyal to their employer. Using data from the Work and Employment Relations Survey (WERS), the results confirm the positive association between regional unemployment and employee loyalty. A disaggregated analysis by type of business reveals that this association is stronger in the private sector. The study adds a spatial dimension to an emergent literature that examines how unemployment affects the employed.