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Causal Relations between Knowledge-Intensive Business Services and Regional Employment Growth

Listed author(s):
  • Thomas Brenner

    (Department of Geography, Philipps Universitaet Marburg)

  • Marco Capasso

    (School of Business and Economics, Maastricht University)

  • Matthias Duschl

    (Department of Geography, Philipps Universitaet Marburg)

  • Koen Frenken

    (Copernicus Institute, Utrecht University and CIRCLE, Lund University)

  • Tania Treibich

    (School of Business and Economics, Maastricht University and OFCE and Scuola Superiore Sant'Anna)

This paper studies the causal relations between regional employment growth in Knowledge- Intensive Business Services (KIBS) and overall regional employment growth using German labour-market data for the period 1999-2012. Adopting a recently developed technique, we are able to estimate a structural vector auto- regressive model in which the causal directions between KIBS and other sectors are examined including various time lags. One main finding holds that although regional growth has a negative short-term effect on KIBS, KIBS growth has a long-term posi- tive effect on the whole regional economy. This result confirms the claim that KIBS can play a key role in regional policies. Distinguishing between financial and non- financial KIBS, we find that financial KIBS have a procyclical effect on regional growth underlining the potential de-stabilizing effect of a large financial sector.

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File URL: ftp://137.248.191.199/RePEc/pum/wpaper/wp0415.pdf
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Paper provided by Philipps University Marburg, Department of Geography in its series Working Papers on Innovation and Space with number 2015-04.

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Length: 32 pages
Date of creation: 16 Dec 2015
Handle: RePEc:pum:wpaper:2015-04
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