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Related Variety, Unrelated Variety and Regional Functions: Identifying Sources of Regional Employment Growth in Germany from 2003 to 2008

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  • Matthias Brachert
  • Alexander Kubis
  • Mirko Titze

Abstract

This article analyses how regional employment growth in Germany is affected by related variety, unrelated variety and the functions a region performs in the production process. Following the related variety literature, we argue that regions benefit from the existence of related activities that facilitate economic development. However, we argue that the sole reliance of related variety on standard industrial classifications remains debatable. Hence, we offer estimations for establishing that conceptual progress can indeed be made when a focus for analysis goes beyond solely considering industries. We develop an industry-function based approach of related and unrelated variety. Our findings suggest that related variety only in combination with a high functional specialization of the region facilitates regional growth in Germany. Additionally, also unrelated variety per se fails to wield influences affecting development of regions. It is rather unrelated, but functionally proximate variety in the groups “White Collar” and “Blue Collar Workers” positively affects regional employment growth.

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Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 15.

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Date of creation: Oct 2011
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Handle: RePEc:iwh:dispap:15-11

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Keywords: related variety; unrelated variety; regional functions; functional specialization;

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References

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  1. Frank Neffke & Martin Henning & Ron Boschma, 2011. "How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions," Economic Geography, Clark University, vol. 87(3), pages 237-265, 07.
  2. Michaela Trippl, 2010. "Developing Cross-Border Regional Innovation Systems: Key Factors And Challenges," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(2), pages 150-160, 04.
  3. Koen Frenken & Ron A. Boschma, 2007. "A theoretical framework for Evolutionary Economic Geography: Industrial dynamics and urban growth as a branching process," Papers in Evolutionary Economic Geography (PEEG) 0701, Utrecht University, Section of Economic Geography, revised Mar 2007.
  4. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-90, October.
  5. Gilles Duranton & Diego Puga, 2002. "From Sectoral to Functional Urban Specialization," NBER Working Papers 9112, National Bureau of Economic Research, Inc.
  6. Bode, Eckhardt, 1998. "Lokale Wissensdiffusion und regionale Divergenz in Deutschland," Open Access publications from Kiel Institute for the World Economy info:hdl:10419/1038, Kiel Institute for the World Economy.
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  1. Ron Boschma & Asier Minondo & Mikel Navarro, 2012. "The emergence of new industries at the regional level in Spain. A proximity approach based on product-relatedness," Papers in Evolutionary Economic Geography (PEEG) 1201, Utrecht University, Section of Economic Geography, revised Jan 2012.

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