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Thresholds for employment and unemployment: A spatial analysis of German regional labour markets, 1992-2000

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Reinhold Kosfeld
Christian Dreger

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Abstract

This paper applies Verdoorn's and Okun's law to derive efficient estimates of the employment and unemployment threshold in the Unified Germany. The analysis is built on a disaggregated dataset of regional labour markets, where spatial dependencies are taken into account. Especially, a spatial SUR model is proposed utilising the eigenfunction decomposition approach suggested by Griffith (1996, 2000). The thresholds turn out to be unstable over time. However, minimum output growth sufficient for a rise in employment is below the level needed for a drop in the unemployment rate. If spatial effects are ignored, the thresholds seem to be markedly overrated. Copyright (c) 2006 the author(s). Journal compilation (c) 2006 RSAI.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1435-5957.2006.00096.x
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Article provided by Blackwell Publishing in its journal Papers in Regional Science.

Volume (Year): 85 (2006)
Issue (Month): 4 (November)
Pages: 523-542
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Handle: RePEc:bla:presci:v:85:y:2006:i:4:p:523-542

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-36, May. [Downloadable!] (restricted)
  2. Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Blackwell Publishing, vol. 41(1), pages 117-147. [Downloadable!] (restricted)
  3. Attfield, Clifford L. F. & Silverstone, Brian, 1998. "Okun's Law, Cointegration and Gap Variables," Journal of Macroeconomics, Elsevier, vol. 20(3), pages 625-637, July. [Downloadable!] (restricted)
  4. Freeman, Donald G, 2001. "Panel Tests of Okun's Law for Ten Industrial Countries," Economic Inquiry, Oxford University Press, vol. 39(4), pages 511-23, October.
  5. Moosa, Imad A., 1997. "A Cross-Country Comparison of Okun's Coefficient," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 335-356, June. [Downloadable!] (restricted)
  6. Rowthorn, R E, 1979. "A Note on Verdoorn's Law," Economic Journal, Royal Economic Society, vol. 89(353), pages 131-33, March. [Downloadable!] (restricted)
  7. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April. [Downloadable!] (restricted)
  8. Bernard Fingleton, 2000. "Spatial econometrics, economic geography, dynamics and equilibrium: a 'third way'?," Environment and Planning A, Pion Ltd, London, vol. 32(8), pages 1481-1498, August. [Downloadable!] (restricted)
  9. Stephen G. Cecchetti & Robert W. Rich, 1999. "Structural estimates of the U.S. sacrifice ratio," Staff Reports 71, Federal Reserve Bank of New York. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hans-Friedrich Eckey & Matthias Türck, 2006. "Convergence of EU-Regions. A Literature Report," Discussion Papers in Economics 80/06, University of Kassel, Institute of Economics. [Downloadable!]
  2. Hans-Friedrich Eckey & Thomas Döring & Matthias Türck, 2006. "Convergence of Regions from 23 EU Member States," Discussion Papers in Economics 86/06, University of Kassel, Institute of Economics. [Downloadable!]
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