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Structural change and regional employment dynamics

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  • Uwe Blien
  • Helge Sanner

Abstract

A casual look at regional unemployment rates reveals that there are vast differences, which cannot be explained by different institutional settings. Our paper attempts to trace these differences in the labor market performance back to the regions' specialization in products that are more or less advanced in their product cycle. The model we develop shows how individual profit and utility maximization endogenously yields higher employment levels in the beginning. In later phases, however, employment decreases in the presence of process innovation. Our model suggests that the only way to escape from this vicious circle is to specialize in products that are at the beginning of their "economic life". The model is based on an interaction of demand and supply side forces.

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Bibliographic Info

Paper provided by Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät in its series Volkswirtschaftliche Diskussionsbeiträge with number 82.

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Date of creation: Feb 2006
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Handle: RePEc:pot:vwldis:82

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Related research

Keywords: Structural change; Productivity growth; Labor market dynamics; Specialization of Regions;

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References

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  1. Pierre-Philippe Combes & Thierry Magnac & Jean-Marc Robin, 2004. "The dynamics of local employment in France," Research Unit Working Papers 0402, Laboratoire d'Economie Appliquee, INRA.
  2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
  3. Jens Südekum, 2003. "Increasing Returns and Spatial Unemployment Disparities," Departmental Discussion Papers 117, University of Goettingen, Department of Economics.
  4. 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.
  5. Blanchflower, David G. & Oswald, Andrew J., 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA).
  6. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  8. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, 07.
  9. Richard B. Freeman, 2000. "Single Peaked Vs. Diversified Capitalism: The Relation Between Economic Institutions and Outcomes," NBER Working Papers 7556, National Bureau of Economic Research, Inc.
  10. Paul Cavelaars, 2005. "Has the Tradeoff Between Productivity Gains and Job Growth Disappeared?," Kyklos, Wiley Blackwell, vol. 58(1), pages 45-64, 02.
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Citations

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Cited by:
  1. Klaus Schöler, 2007. "Gibt es eine optimale Stadtgröße?," Volkswirtschaftliche Diskussionsbeiträge 89, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  2. Kruppe, Thomas, 2006. "Die Förderung beruflicher Weiterbildung : eine mikroökonometrische Evaluation der Ergänzung durch das ESF-BA-Programm," IAB Discussion Paper 200621, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Eckey, Hans-Friedrich & Schwengler, Barbara & Türck, Matthias, 2007. "Vergleich von deutschen Arbeitsmarktregionen," IAB Discussion Paper 200703, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  4. Romeu Gordo, Laura, 2006. "Compression of morbidity and the labor supply of older people," IAB Discussion Paper 200609, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  5. Zierahn, Ulrich, 2011. "Regional unemployment and new economic geography," HWWI Research Papers 105, Hamburg Institute of International Economics (HWWI).
  6. Amend, Elke & Herbst, Patrick, 2008. "Labor market pooling and human capital investment decisions," IAB Discussion Paper 200804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  7. Uwe Blien & Lutz Eigenhueller & Markus Promberger & Norbert Schanne, 2013. "The Shift-Share Regression: An Application to Regional Employ-ment Development," ERSA conference papers ersa13p614, European Regional Science Association.
  8. Albrecht Kauffmann, 2007. "Transport Costs and the Size of Cities : the Case of Russia," Volkswirtschaftliche Diskussionsbeiträge 93, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  9. Blien, Uwe & Kirchhof, Kai & Ludewig, Oliver, 2006. "Agglomeration effects on labour demand," IAB Discussion Paper 200628, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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