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Second-order polynomial spatial error model. Global and local spatial dependence in unemployment in Andalusia

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  • López-Hernández, Fernando A.

Abstract

This paper analyses a second-order polynomial spatial structure in the residues of a regression model. We propose a new specification that captures spatial dependence on two different levels, adding a new autoregressive cycle to the errors of the classical spatial error model (SEM). The inference problems of the parameters are solved by means of maximum likelihood estimation. The model is confirmed to identify two spatial structures of spatial dependence, global and local, by an empirical application in the analysis of municipal unemployment in the Spanish region of Andalusia. Finally, Monte Carlo is implemented to evaluate the performance of this strategy in a context of finite size samples.

Suggested Citation

  • López-Hernández, Fernando A., 2013. "Second-order polynomial spatial error model. Global and local spatial dependence in unemployment in Andalusia," Economic Modelling, Elsevier, vol. 33(C), pages 270-279.
  • Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:270-279
    DOI: 10.1016/j.econmod.2013.04.014
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    More about this item

    Keywords

    Spatial econometric; Higher order spatial models; Instability spatial dependence; Local models; Unemployment; Andalusia;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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