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The Empirical Relevance of the New Economic Geography: Testing for a Spatial Wage Structure in Germany

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Author Info

  • Steven Brakman
  • Harry Garretsen
  • Marc Schramm

Abstract

In this paper we want to shed some light on the empirical relevance of the new economic geography. Using one of the central features of the core new economic geography models, namely that wages have the tendency to fall the further one moves away from centres of economic activity, we investigate the existence of a spatial wage structure for post-unification Germany. We find support for a spatial wage structure for German city-district wages, and hence indirectly for the relevance of a new economic geography model for Germany. We also find that demand linkages in Germany are strongly localised and that the “old” border still matters to the extent that economic interactions between western and eastern Germany are still limited compared to the situation within these two parts of Germany.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 395.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_395

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Related research

Keywords: New economic geography; spatial wage structure; Germany;

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References

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  1. repec:fth:michin:382 is not listed on IDEAS
  2. Vernon Henderson & Duncan Black, 1999. "Spatial Evolution of Population and Industry in the United States," American Economic Review, American Economic Association, vol. 89(2), pages 321-327, May.
  3. Guy Dumais & Glenn Ellison & Edward L Glaeser, 1998. "Geographic Concentration as a Dynamic Process," Working Papers 98-3, Center for Economic Studies, U.S. Census Bureau.
  4. Brakman, Steven & Garretsen, Harry, 1993. "The Relevance of Initial Conditions for the German Unification," Kyklos, Wiley Blackwell, vol. 46(2), pages 163-81.
  5. Donald R. Davis & David E. Weinstein, 1996. "Does Economic Geography Matter for International Specialization?," NBER Working Papers 5706, National Bureau of Economic Research, Inc.
  6. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  7. Paul R. Krugman, 1991. "First Nature, Second Nature, and Metropolitan Location," NBER Working Papers 3740, National Bureau of Economic Research, Inc.
  8. Hanson, G.H., 1999. "`Market Potential, Increasing Returns, and Geographic Concentration," Working Papers 439, Research Seminar in International Economics, University of Michigan.
  9. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
  10. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-25, December.
  11. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, vol. 107(440), pages 113-33, January.
  12. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
  13. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
  14. Obstfeld, Maurice & Rogoff, Kenneth, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," Center for International and Development Economics Research, Working Paper Series qt0sx02651, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  15. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
  16. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December.
  17. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
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Citations

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Cited by:
  1. Alejandro Diaz-Bautista, 2005. "Convergence and Economic Growth considering Human Capital and R&D Spillovers Convergencia y Crecimiento Economico en Mexico considerando al Capital Humano y derrames en Investigacion y Desarrollo," Urban/Regional 0506012, EconWPA.
  2. Arne Feddersen & Gabriel Ahlfeldt, 2011. "From Periphery to Core: Economic Adjustments to High Speed Rail," ERSA conference papers ersa11p545, European Regional Science Association.
  3. Annekatrin Niebuhr, 2003. "Market Potential and Regional Disparities in Europe," ERSA conference papers ersa03p178, European Regional Science Association.
  4. Pedro Vasconcelos Amaral & Mauro Borges Lemos & Rodrigo Ferreira Simões & Flávia Chein Feres, 2007. "Regional imbalances and market potential in Brazil," Textos para Discussão Cedeplar-UFMG td324, Cedeplar, Universidade Federal de Minas Gerais.
  5. Klaus Schöler, 2006. "Transformationsprozesse und Neue Ökonomische Geographie: Erklärungsbeiträge der Neuen Ökonomischen Geographie zur Transformation der ostdeutschen Volkswirtschaft," Volkswirtschaftliche Diskussionsbeiträge 85, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  6. H Garretsen & M. Schramm & S. Brakman, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-08, Utrecht School of Economics.

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