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Optimizing German regional policy-2004: A study based on empirical data from 1994 to 2001

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  • Tangian, Andranik S.

Abstract

Reducing disparities among regions within European countries together with economic development is the aim of European and national structural policies. In particular, a European grant contributes to the German governmental program for reducing and equalizing regional unemployment. The goal is to bring unemployment down to the national average by creating new and/or by safeguarding existing jobs, which also contributes to decreasing national unemployment and to GDP growth. The distribution of available aid among 271 German labor market regions is considered as an econometric decision problem with three targets: (1) minimization of unemployment, (2) maximization of GDP, and (3) equalization of regional unemployment rates, subject to the budget constraint and some administrative restrictions. To prepare grounds for optimization, econometric predictions are made for the year 2004 from regional data 1994-2001. The model can be regarded as a prototype of decision-aid for designing regional policy at national and European levels.

Suggested Citation

  • Tangian, Andranik S., 2003. "Optimizing German regional policy-2004: A study based on empirical data from 1994 to 2001," WSI Working Papers 119, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.
  • Handle: RePEc:zbw:wsidps:119
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    Keywords

    European Commission; structural fund grants; regional policy; unemployment; equalizing regional unemployment rates; economic growth;

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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