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Explaining regional unemployment differences in Germany: a spatial panel data analysis

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  • Franziska Lottmann
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    Abstract

    This paper analyzes determinants for regional differences in German unemployment rates. We specify a spatial panel model to avoid biased and inefficient estimates due to spatial dependence. Additionally, we control for temporal dynamics in the data. Our study covers the whole of Germany as well as East andWest Germany separately. We exploit district-level data on 24 possible explanatory variables for the period from 1999 until 2007. Our results suggest that the spatial dynamic panel model is the best model for this analysis. Furthermore, we find that German regional unemployment is of disequilibrium nature, which justifies political interventions.

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    File URL: http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2012-026.pdf
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    Bibliographic Info

    Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2012-026.

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    Length: 56 pages
    Date of creation: Mar 2012
    Date of revision:
    Handle: RePEc:hum:wpaper:sfb649dp2012-026

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    Related research

    Keywords: regional unemployment; spatial dependence; spatial panel models; Germany;

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    References

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    1. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
    2. Baltagi, Badi H. & Liu, Long, 2008. "Testing for random effects and spatial lag dependence in panel data models," Statistics & Probability Letters, Elsevier, vol. 78(18), pages 3304-3306, December.
    3. Aragon, Y. & Haughton, D. & Haughton, J. & Leconte, E. & Malin, E. & Ruiz-Gazen, A. & Thomas-Agnan. C., 1999. "Explaining the Pattern of Regional Unemployment: the Case of the Midi-Pyrenees Region," Papers 99.519, Toulouse - GREMAQ.
    4. Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor & Francis Journals, vol. 31(3), pages 237-252.
    5. Taylor, Jim & Bradley, Steve, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Wiley Blackwell, vol. 50(2), pages 221-45.
    6. Georges Bresson & Badi H. Baltagi & Alain Pirotte, 2007. "Panel unit root tests and spatial dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 339-360.
    7. repec:kas:wpaper:2005-76 is not listed on IDEAS
    8. Badi H. Baltagi & Seuck Heun Song & Won Koh, 2002. "Testing Panel Data Regression Models with Spatial Error Correlation," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B6-4, International Conferences on Panel Data.
    9. Mark Partridge & Dan Rickman, 1997. "The Dispersion of US State Unemployment Rates: The Role of Market and Non-market Equilibrium Factors," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 593-606.
    10. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
    11. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
    12. Marston, Stephen T, 1985. "Two Views of the Geographic Distribution of Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 57-79, February.
    13. Debarsy, Nicolas & Ertur, Cem, 2010. "Testing for spatial autocorrelation in a fixed effects panel data model," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 453-470, November.
    14. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
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    Cited by:
    1. César Augusto MERCHÁN HERNÁNDEZ, 2014. "Desempleo y ocupación en las ciudades colombianas. Un ejercicio con datos panel," ARCHIVOS DE ECONOMÍA 011212, DEPARTAMENTO NACIONAL DE PLANEACIÓN.

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