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Convergence in West German Regional Unemployment Rates

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  • Christian Bayer

    (European University Institute, Department of Economics, Florence)

  • Falko Juessen

    (Faculty of Economic & Social Science, University of Dortmund)

Abstract

Differences in regional unemployment rates are often used to describe regional economic inequality. This paper asks whether changes in regional unemployment differences in West Germany are persistent over time. Only if such changes are persistent, the differences are a sensible measure of inequality and only then can policies be effective that aim at lowering the dispersion of unemployment rates. Our analysis follows a time-series approach to economic convergence and we test whether unemployment differences between regions are stationary or not. While univariate tests show that changes in unemployment differences are persistent, more powerful panel tests find them to be only transitory. However, these tests reveal only a moderate speed of convergence. Since there is a structural break following the second oil crisis, we also employ unit-root tests that allow for such break. Again we find strong evidence for convergence and now also the speed of convergence is found to be very high.

Suggested Citation

  • Christian Bayer & Falko Juessen, 2004. "Convergence in West German Regional Unemployment Rates," Urban/Regional 0411007, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpur:0411007
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    Cited by:

    1. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    2. Bernd Aumann & Rolf Scheufele, 2010. "Is East Germany catching up? A time series perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 22(2), pages 177-192.
    3. Alka Obadić & Vladimir Arčabić & Lucija Rogić Dumančić, 2021. "Labor market institutions convergence in the European Union," EFZG Working Papers Series 2102, Faculty of Economics and Business, University of Zagreb.
    4. Natalia PRESSMAN & Vadim KLEPFISH, 2008. "Regional Unemployment Rate Convergence in Israel," EcoMod2008 23800110, EcoMod.
    5. Fábio Augusto Reis Gomes & Cleomar Gomes da Silva, 2006. "Hysteresis Vs. Nairu And Convergence Vs. Divergence: The Behavior Of Regional Unemployment Rates In Brazil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 161, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Eckey, Hans-Friedrich & Kosfeld, Reinhold & Türck, Matthias, 2005. "Regional convergence in Germany: A geographically weighted regression approach," Volkswirtschaftliche Diskussionsbeiträge 76, University of Kassel, Faculty of Economics and Management.
    7. Joanna Tyrowicz & Piotr Wojcik, 2011. "Nonlinear Stochastic Convergence Analysis of Regional Unemployment Rates in Poland," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 3(1), pages 59-79, July.
    8. Joanna Tyrowicz & Piotr Wójcik, 2007. "Konwergencja bezrobocia w Polsce w latach 1999-2006," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 10, pages 1-20.
    9. Roberta Colavecchio & Declan Curran & Michael Funke, 2009. "Drifting together or falling apart? The empirics of regional economic growth in post-unification Germany," Applied Economics, Taylor & Francis Journals, vol. 43(9), pages 1087-1098.
    10. László Kónya, 2020. "Did the unemployment rates converge in the EU?," Empirical Economics, Springer, vol. 59(2), pages 627-657, August.
    11. Darja Borsic & Alenka Kavkler, 2009. "Duration of Regional Unemployment Spells in Slovenia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(2), pages 123-146.

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    More about this item

    Keywords

    stochastic convergence; unemployment; structural break; unit root;
    All these keywords.

    JEL classification:

    • R - Urban, Rural, Regional, Real Estate, and Transportation Economics

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