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Interaction of Regional Population and Employment

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  • 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)

Abstract

We investigate the interaction of regional population and employment in a simu1taneousmodel, allowing for interregional commuting. The proposed dynamic specificationdistinguishes between short-run and equilibrium adjustment effects and it encompassesthe lagged-adjustment specification that is standard in the literature. We interpret thelong-run relationship between levels of population and employment as a labour marketequilibrium. The model is estimated on a panel of 1973-2000 annual data for 40regions in The Netherlands, controlling for region and time-specific heterogeneity.Identification of the model is improved by decomposing population growth into netinterregional migration and exogenous natural popu1ation developments. We find thatemployment growth responds quite strongly to deviations from regional labour marketequilibria. Net migration is dominated by housing market developments and in the shortrun on1y slightly affected by increases in regional employment. The main implication isthat equilibrium on regional labour markets is obtained through adjustment ofemployment instead of population. We test and reject the lagged-adjustmentspecification.

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Bibliographic Info

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

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  1. Lourens Broersma & Jouke Van Dijk, 2001. "Regional labour market dynamics in The Netherlands," ERSA conference papers ersa01p197, European Regional Science Association.
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  12. Bollinger, Christopher R. & Ihlanfeldt, Keith R., 1997. "The Impact of Rapid Rail Transit on Economic Development: The Case of Atlanta's MARTA," Journal of Urban Economics, Elsevier, vol. 42(2), pages 179-204, September.
  13. Donald G. Freeman, 2001. "Sources of fluctuations in regional growth," The Annals of Regional Science, Springer, vol. 35(2), pages 249-266.
  14. Greenwood, Michael J & Hunt, Gary L, 1984. "Migration and Interregional Employment Redistribution in the United States," American Economic Review, American Economic Association, vol. 74(5), pages 957-69, December.
  15. Thurston Lawrence & Yezer Anthony M. J., 1994. "Causality in the Suburbanization of Population and Employment," Journal of Urban Economics, Elsevier, vol. 35(1), pages 105-118, January.
  16. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
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  18. Schmitt, Bertrand & Henry, Mark S., 2000. "Size and growth of urban centers in French labor market areas: consequences for rural population and employment," Regional Science and Urban Economics, Elsevier, vol. 30(1), pages 1-21, January.
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Cited by:
  1. 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 Document 113, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Wouter Vermeulen & Jos van Ommeren, 2007. "Does Land Use Planning shape Regional Economies?," Tinbergen Institute Discussion Papers 08-004/3, Tinbergen Institute.
  3. 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.

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