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The importance of spatial autocorrelation for regional employment growth in Germany

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  • Ulrich Zierahn

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Abstract

The regional employment growth in Germany is characterized by huge disparities. Whereas institutional factors might explain the disparities of employment growth between nations, they can only account for a minor fraction of the regional employment growth. Instead the sectoral structure of employment is often seen as a major reason for regional disparities. An important attribute of the research conducted so far is that it concentrates on estimating shift-share-regression-models when controlling for the influence of the sectoral structure on employment growth. However, these models do not account for spatial interdependencies and treat regions as autarkies, though on a regional level such effects are very likely to occur. Against this background, the present article focuses on analyzing the role played by spatial interdependencies between regions in explaining their employment growth. By using spatial econometric methods this article emphasizes that regional employment growth is characterized by spatial autocorrelation, pointing to spatial interdependencies between the regions. This holds true also for mayor factors of regional employment such as wages and qualification. In this article three different models of spatial interdependencies are being compared: the spatial lag, spatial error and cross regressive model. While the spatial lag model controls for the influence of the value of the endogenous variable in neighboring regions (i.e. the spatial lag of the endogenous variable) on the endogenous variable in the observed region, the spatial error model estimates the influence of the spatial lag of the error term. Finally, the cross regressive model includes the spatial lag of the exogenous variables. These spatial interdependencies are integrated into the framework of the shift-share-regression-model to identify the relevant spatial interdependencies and to measure their influence on the regional employment growth in Germany. Preliminary results indicate that the spatial autocorrelation of the regional employment growth is to a large extend caused by the spatial lags of the exogenous variables. The spatial lag of the endogenous variable and the error term become insignificant, when the spatial lags of the exogenous variables are being accounted for. These effects can be interpreted as spatial spillover effects.

Suggested Citation

  • Ulrich Zierahn, 2011. "The importance of spatial autocorrelation for regional employment growth in Germany," ERSA conference papers ersa10p205, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p205
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    References listed on IDEAS

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    Cited by:

    1. Matthias Firgo & Oliver Fritz, 2017. "Does having the right visitor mix do the job? Applying an econometric shift-share model to regional tourism developments," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(3), pages 469-490, May.
    2. Uwe Blien & Lutz Eigenhueller & Markus Promberger & Norbert Schanne, 2013. "The Shift-Share Regression: An Application to Regional Employ-ment Development," ERSA conference papers ersa13p614, European Regional Science Association.
    3. Oberst, Christian & Oelgemöller, Jens, 2013. "Economic Growth and Regional Labor Market Development in German Regions: Okun’s Law in a Spatial Context," FCN Working Papers 5/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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