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Structural Change and Regional Employment Dynamics

  • Helge Sanner

    ()

  • Uwe Blien

    ()

A casual look at regional unemployment rates reveals that there are vast differences, which appearently cannot be explained by different institutional settings. Our paper attempts to trace the these differences in the regions' labor market performance back to the regions' specialization in products that are more or less advanced in the product cycle. The model we develop shows how individual profit and utility maximization endogenously leads to decreasing employment in the presence of process innovation. Things get even worse if the considered region is less innovative than others. Our model suggests that the only way to escape from this vicious circle is to specialize on products that are at the beginning of their economic life.

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File URL: http://www-sre.wu-wien.ac.at/ersa/ersaconfs/ersa06/papers/699.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa06p699.

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Date of creation: Aug 2006
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Handle: RePEc:wiw:wiwrsa:ersa06p699
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  1. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
  2. Jens Suedekum, 2005. "Increasing returns and spatial unemployment disparities," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 159-181, 06.
  3. Combes, Pierre-Philippe & Magnac, Thierry & Robin, Jean-Marc, 2004. "The dynamics of local employment in France," Journal of Urban Economics, Elsevier, vol. 56(2), pages 217-243, September.
  4. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
  5. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  6. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  7. Richard B. Freeman, 2000. "Single Peaked Vs. Diversified Capitalism: The Relation Between Economic Institutions and Outcomes," NBER Working Papers 7556, National Bureau of Economic Research, Inc.
  8. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, 07.
  9. Paul Cavelaars, 2005. "Has the Tradeoff Between Productivity Gains and Job Growth Disappeared?," Kyklos, Wiley Blackwell, vol. 58(1), pages 45-64, 02.
  10. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
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