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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

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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Bibliographic Info

Article provided by Wiley Blackwell 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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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190

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  1. Cecchetti, Stephen G & Rich, Robert W, 2001. "Structural Estimates of the U.S. Sacrifice Ratio," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 19(4), pages 416-27, October.
  2. 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.
  3. Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1999. "Kaldor's Laws and Spatial Dependence: Evidence for the European Regions," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(5), pages 443-451.
  4. Elhorst, J.P., 2000. "Dynamic models in space and time," Research Report 00C16, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  5. Freeman, Donald G, 2001. "Panel Tests of Okun's Law for Ten Industrial Countries," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 39(4), pages 511-23, October.
  6. 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.
  7. Rowthorn, R E, 1979. "A Note on Verdoorn's Law," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 89(353), pages 131-33, March.
  8. Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 41(1), pages 117-147.
  9. Moosa, Imad A., 1997. "A Cross-Country Comparison of Okun's Coefficient," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 335-356, June.
  10. Attfield, Clifford L. F. & Silverstone, Brian, 1998. "Okun's Law, Cointegration and Gap Variables," Journal of Macroeconomics, Elsevier, Elsevier, vol. 20(3), pages 625-637, July.
  11. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, Elsevier, vol. 22(2), pages 331-356, April.
  12. Kaldor, Nicholas, 1975. "Economic Growth and the Verdoorn Law-A Comment on Mr. Rowthorn's Article," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 85(340), pages 891-96, December.
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Cited by:
  1. Herwartz, Helmut & Niebuhr, Annekatrin, 2011. "Regional labor demand and national labor market institutions in the EU15," HWWI Research Papers 112, Hamburg Institute of International Economics (HWWI).
  2. Roberto Patuelli & Daniel A. Griffith & Michael Tiefelsdorf & Peter Nijkamp, 2011. "Spatial Filtering and Eigenvector Stability: Space-Time Models for German Unemployment Data," International Regional Science Review, , , vol. 34(2), pages 253-280, April.
  3. Roberto Patuelli & Norbert Schanne & Daniel A. Griffith & Peter Nijkamp, 2012. "Persistence Of Regional Unemployment: Application Of A Spatial Filtering Approach To Local Labor Markets In Germany," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 52(2), pages 300-323, 05.
  4. Ulrich Zierahn, 2010. "The Importance of Spatial Autocorrelation for Regional Employment Growth in Germany," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201031, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  5. Hans-Friedrich Eckey & Reinhold Kosfeld & Matthias Türck, 2007. "Regionale Entwicklung mit und ohne räumliche Spillover-Effekte," Jahrbuch für Regionalwissenschaft, Springer, Springer, vol. 27(1), pages 23-42, February.
  6. Nikolay Kaledin, 2013. "Societal geography and regionalization of society," ERSA conference papers ersa13p1334, European Regional Science Association.
  7. Martinho, Vítor João Pereira Domingues, 2012. "What the Keynesian theory said about Portugal?," EconStor Preprints 59007, ZBW - German National Library of Economics.

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