Regional Economic Resilience: An Entropic Analysis of the 2008 Economic Crisis

This paper provides an analysis of labour force market dynamics of the 2008 financial crises and discusses the extent to which entropy measures can be useful in predicting regional employment dynamics. We find that the Shannon entropy and Tsallis entropy is more suitable for prediction of size of employment downturn (recession index) while the Renyi entropy is the dominant predictor of rate of employment downturn in recession phase. The results of the statistical analysis show that when Shannon entropy was growing through the recovery phase before the crisis, regions experience a higher rate of employment decrease in the following recession period. On the other hand, the higher the Shannon entropy was, the smaller recession index. However, the Tsallis entropy plays a different role in comparison to Shannon entropy. The higher the measured Tsallis entropy was, the more significantly the region was affected. In conclusion, the use of entropy as a resilience indicator in terms of regional policy is a significant predictor of regional resilience.