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Interaction of Regional Population and Employment

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Author Info
Wouter Vermeulen () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, and CPB Netherlands Bureau for Economic Policy Analysis, The Hague)
Jos van Ommeren () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

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Abstract

We investigate the interaction of regional population and employment in a simu1taneous model, allowing for interregional commuting. The proposed dynamic specification distinguishes between short-run and equilibrium adjustment effects and it encompasses the lagged-adjustment specification that is standard in the literature. We interpret the long-run relationship between levels of population and employment as a labour market equilibrium. The model is estimated on a panel of 1973-2000 annual data for 40 regions in The Netherlands, controlling for region and time-specific heterogeneity. Identification of the model is improved by decomposing population growth into net interregional migration and exogenous natural popu1ation developments. We find that employment growth responds quite strongly to deviations from regional labour market equilibria. Net migration is dominated by housing market developments and in the short run on1y slightly affected by increases in regional employment. The main implication is that equilibrium on regional labour markets is obtained through adjustment of employment instead of population. We test and reject the lagged-adjustment specification.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-083/3.

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Date of creation: 16 Jul 2004
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Handle: RePEc:dgr:uvatin:20040083

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Related research
Keywords: simultaneous model of regional population and employment; migration; regional labour markets; lagged adjustment dynamics;

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Find related papers by JEL classification:
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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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.:
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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. Wouter Vermeulen, 2005. "Regional disparities in a small country? An assessment of the regional dimension to the Dutch labour market on the basis of regional unemployment and participation differentials," ERSA conference papers ersa05p207, European Regional Science Association. [Downloadable!]
  2. Wouter Vermeulen, 2006. "Regional disparities in a small country? An analysis of regional unemployment and participation differentials in the Netherlands from 1975 to 2003," CPB Documents 113, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  3. Wouter Vermeulen & Jos van Ommeren, 2007. "Does Land Use Planning shape Regional Economies?," Tinbergen Institute Discussion Papers 08-004/3, Tinbergen Institute. [Downloadable!]
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