Do informal institutions matter for the economic resilience of European regions? A study of the post-2008 shock

Abstract

This paper investigates the relationship between informal institutions and resilience across EU regions in the years following the 2008 Great Recession. By using voluntary work as a proxy for informal institutions, we analyse its association with regional resilience over two different periods: the resistance phase (2008–2010) and the recovery phase (2010–2013). Overall, we find robust evidence that voluntary work is positively associated with greater regional resilience. Our results also show that there is a relation between voluntary work and formal institutions, represented by welfare state models. Overall, the effect of voluntary work is always positive for strong welfare states, but its effect is mitigated by the presence of public provisions. Additionally, in regions with a relatively weaker institutional context, informal institutions retain their positive effect. However, in this context, informal institutions appear to take more time to deploy their effects, but their positive impact on regional labour market recovery is even stronger than in other welfare regimes, probably due to the poor public support that characterises this welfare system.