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Persistence of regional unemployment : Application of a spatial filtering approach to local labour markets in Germany

  • Patuelli, Roberto
  • Schanne, Norbert

    ()

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Griffith, Daniel A.
  • Nijkamp, Peter

"The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the 'home market') that is usually incorporated in the fixed effects parameters. The same argument applies for the spatial filter modelling of the heterogenous dynamics. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes. We present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive parameters estimated for unemployment data for German NUTS-3 regions. We find widely heterogeneous but generally high persistence in regional unemployment rates." (Author's abstract, IAB-Doku) ((en))

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Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201103.

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Length: 37 pages
Date of creation: 10 Feb 2011
Date of revision:
Publication status: published in: Journal of Regional Science, Vol. 52, No. 2 (2012), p. 300-323
Handle: RePEc:iab:iabdpa:201103
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  1. Roberto Patuelli & Daniel A. Griffith & Michael Tiefelsdorf & Peter Nijkamp, 2009. "Spatial Filtering and Eigenvector Stability: Space-Time Models for German Unemployment Data," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0902, USI Università della Svizzera italiana.
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  8. Schanne, N. & Wapler, R. & Weyh, A., 2010. "Regional unemployment forecasts with spatial interdependencies," International Journal of Forecasting, Elsevier, vol. 26(4), pages 908-926, October.
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  10. Lopez-Bazo, Enrique & Del Barrio, Tomas & Artis, Manuel, 2002. "The regional distribution of spanish unemployment. A spatial analysis," ERSA conference papers ersa02p020, European Regional Science Association.
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  12. Johan H.L. Oud & Henk Folmer & Roberto Patuelli & Peter Nijkamp, 2008. "Continuous-Time Modelling with Spatial Dependence," Working Paper Series 39-08, The Rimini Centre for Economic Analysis, revised Oct 2010.
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  24. Bentolila, Samuel & Jimeno, Juan F, 1995. "Regional Unemployment Persistence (Spain, 1976-94)," CEPR Discussion Papers 1259, C.E.P.R. Discussion Papers.
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  26. Joanna Tyrowicz & Piotr Wójcik, 2010. "Regional Dynamics of Unemployment in Poland A Convergence Approach," AIEL Series in Labour Economics, in: Floro Ernesto Caroleo & Francesco Pastore (ed.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, edition 1, chapter 6, pages 149-173 AIEL - Associazione Italiana Economisti del Lavoro.
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