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The impact of regional location factors on job creation, job destruction and employment growth in manufacturing

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  • Raimund Krumm

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  • Harald Strotmann

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Abstract

Regions are exposed to intensive competition to provide the most attractive location conditions for firms and their employees. Therefore, regional employment development depends to a decisive degree on the attractiveness of regional location factors. Based upon the creation of establishment-level panel data from Official Statistics for manufacturing in Baden-Wuerttemberg, Germany, from 1980 to 1999 this paper gives an empirical analysis of the impact of regional location conditions on regional manufacturing employment growth. In particular, the paper examines whether the impact of regional location conditions on regional net employment growth is driven by the underlying gross components job creation and/or job destruction. The results indicate that lower regional costs of production and a better regional endowment with skilled labour and R&D promote manufacturing employment growth. Thereby, lower costs of production as measured by a lower wage level stimulate employment growth by decreasing gross job destruction, while a better human capital endowment and a higher regional R&D intensity enhance employment growth by higher rates of gross job creation. Regions characterised by a smaller average firm size in manufacturing experienced higher manufacturing employment growth both by higher rates of job creation and lower rates of job destruction. On the other hand population density stimulates job creation as well as job destruction which lead to a zero effect on the scale of net employment change—indicating a compensation effect “behind the scenes”. Otherwise, the analysis reveals the tendency for regional location factors to influence either only gross job creation or only gross job destruction, but seldom both sides at the same time. Copyright Springer-Verlag 2013

Suggested Citation

  • Raimund Krumm & Harald Strotmann, 2013. "The impact of regional location factors on job creation, job destruction and employment growth in manufacturing," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 23-48, February.
  • Handle: RePEc:spr:jahrfr:v:33:y:2013:i:1:p:23-48
    DOI: 10.1007/s10037-012-0069-y
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    References listed on IDEAS

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    Cited by:

    1. Andreas Koch & Jochen Späth & Harald Strotmann, 2013. "The role of employees for post-entry firm growth," Small Business Economics, Springer, vol. 41(3), pages 733-755, October.
    2. Nadine LEVRATTO & Denis CARRÉ, 2013. "La Croissance Des Établissements Industriels : Une Question De Localisation," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 93-120.

    More about this item

    Keywords

    Regional development; Employment growth; Job creation; Job destruction; Job flows; Location factors; Manufacturing; R11; R3; O18;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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