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The Role of Regional Competition for Demography and Regional Disparities in Germany

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  • Florian W. Bartholomae

    ()
    (Department of Economical and Organizational Sciences, University of the Federal Armed Forces of Germany Munich)

  • Alina M. Popescu

    (University of the Federal Armed Forces Munich)

Abstract

The demographic development in Germany has severe consequences on the economic and social development of the country. The aging and decreasing of the population are certainly the most considered aspects of the demographic change. We consider additionally the competition between regions for inhabitants, which can be observed in Germany and aggravates the country’s demographic situation. Indicators such as the natural populationdevelopment, the fertility rate, the sex ratio, the migration, etc. are varying significantly from region to region. Very strong regional differences in these indicators are observable between East and West Germany, as well as between North and South Germany. High-qualified persons are recruited by other regions for the purpose to built higher location advantages. This intensified competition leads to very big regional differences that some regions cannot successfully face. The consideration, that a cooperation of regions instead their competition would yield success regarding the demographic problem, which is stronger through the national migration, is very important. We consider in our model two utility-maximizing German regions that pursue a policy of attracting young inhabitants through different policy measures.Therefore, we construct an oligopoly model that picture the competition situation. A Prisoner’s dilemma results, where each region has the incentive to attract inhabitants from the other region, despite that cooperation between both regions would lead to higher welfare, better allocation of the factors and less government spending.

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Bibliographic Info

Article provided by Romanian Regional Science Association in its journal Romanian Journal of Regional Science.

Volume (Year): 1 (2007)
Issue (Month): 1 (December)
Pages: 45-70

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Handle: RePEc:rrs:journl:v:1:y:2007:i:1:p:45-70

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  1. Börsch-Supan, Axel, 1997. "Germany: A social security system on the verge of collaps," Sonderforschungsbereich 504 Publications 97-23, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  2. Alícia Adserà, 2004. "Changing fertility rates in developed countries. The impact of labor market institutions," Journal of Population Economics, Springer, vol. 17(1), pages 17-43, February.
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