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The Empirical Relevance of the New Economic Geography: Testing for a Spatial Wage Structure in Germany

Author

Listed:
  • Steven Brakman
  • Harry Garretsen
  • Marc Schramm

Abstract

In this paper we want to shed some light on the empirical relevance of the new economic geography. Using one of the central features of the core new economic geography models, namely that wages have the tendency to fall the further one moves away from centres of economic activity, we investigate the existence of a spatial wage structure for post-unification Germany. We find support for a spatial wage structure for German city-district wages, and hence indirectly for the relevance of a new economic geography model for Germany. We also find that demand linkages in Germany are strongly localised and that the “old” border still matters to the extent that economic interactions between western and eastern Germany are still limited compared to the situation within these two parts of Germany.

Suggested Citation

  • Steven Brakman & Harry Garretsen & Marc Schramm, 2000. "The Empirical Relevance of the New Economic Geography: Testing for a Spatial Wage Structure in Germany," CESifo Working Paper Series 395, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_395
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Annekatrin Niebuhr, 2003. "Market Potential and Regional Disparities in Europe," ERSA conference papers ersa03p178, European Regional Science Association.
    2. S. Brakman & H Garretsen & M. Schramm, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-08, Utrecht School of Economics.
    3. repec:nbp:nbpbik:v:47:y:2016:i:6:p:463-494 is not listed on IDEAS
    4. Pedro Amaral & Mauro Lemos & Rodrigo Simões & Flávia Chein, 2010. "Regional Imbalances and Market Potential in Brazil," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(4), pages 463-482.
    5. Tomasz Brodzicki & Dorota Ciolek, 2015. "Territorial capital and Polish regional development. A neoclassical approach," Working Papers 1511, Instytut Rozwoju, Institute for Development.
    6. Klaus Schöler, 2006. "Transformationsprozesse und Neue Ökonomische Geographie: Erklärungsbeiträge der Neuen Ökonomischen Geographie zur Transformation der ostdeutschen Volkswirtschaft," Volkswirtschaftliche Diskussionsbeiträge 85, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    7. Page, William, 2003. "Germany's Mezzogiorno revisited: Institutions, fiscal transfers and regional convergence," Research Notes 9, Deutsche Bank Research.
    8. Gabriel M. Ahlfeldt & Arne Feddersen, 2010. "From periphery to core: economic adjustments to high speed rail," Working Papers 2010/38, Institut d'Economia de Barcelona (IEB).
    9. Alejandro Diaz-Bautista, 2005. "Convergence and Economic Growth considering Human Capital and R&D Spillovers Convergencia y Crecimiento Economico en Mexico considerando al Capital Humano y derrames en Investigacion y Desarrollo," Urban/Regional 0506012, EconWPA.

    More about this item

    Keywords

    New economic geography; spatial wage structure; Germany;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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