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Mit der Einwohnerzahl einer Stadt steigen im Schnitt auch die Löhne, denn die leistungsfähigsten und damit am besten bezahlten Arbeitskräfte tendieren eher dazu, in größeren Städten zu arbeiten. Mit der Größe einer Stadt steigt zugleich auch die Wahrscheinlichkeit, dass diese Arbeitskräfte bei Betrieben angestellt sind, die alle Beschäftigten überdurchschnittlich gut bezahlen. Dies kann die gesamtwirtschaftliche Produktivität steigern, vergrößert aber die regionalen Lohnunterschiede erheblich., IAB-Forum

Die Corona-Pandemie, der Klimawandel, die demographischen Veränderungen, die marode Infrastruktur - das sind Herausforderungen, die nach einer neuen Finanzpolitik verlangen. Nach Jahren der Versäumnisse muss sie die Grundlagen für die notwendigen Investitionen in die Zukunft schaffen. Welche finanzpolitischen Weichenstellungen sollte die Politik dafür auf Europa-, Bundes- und Landesebene sowie in den Kommunen vornehmen, damit auch die künftigen Generationen in Wohlstand leben können? Die Heinrich-Böll-Stiftung hat ihren finanzpolitischen Arbeitskreis zur Beantwortung dieser und weiterer Fragen um einen Bericht gebeten, der nun vorliegt: Er bietet nicht nur eine Analyse der aktuellen finanzpolitischen Misere, sondern gibt Anregungen und Handlungsempfehlungen für eine echte nachhaltige Finanzpolitik.

The EU steps up its efforts to curb its territorial CO2-emissions. It is planning to introduce a carbon border adjustment mechanism (CBAM) to level the playing field and to raise own resources. However, unilateral European climate policy action, whether shored up with a CBAM or not, can only play a limited role in reducing global CO2-emissions. A U-CBAM cannot stop indirect leakage, it has ambiguous effects on other countries' mitigation efforts, and it poses the risk of conflicts with trade partners.The EU, together with the US and other like-minded countries, should push hard to establish a climate club with a common minimum price of CO2and a common CBAM applied to third countries. Such a framework would incentivize other countries to join while limiting leakage and reducing the risk of trade policy disputes. Die EU verstärkt ihre Bemühungen zur Eindämmung ihrer territorialen CO2-Emissionen. Sie plant die Einführung eines CO2-Grenzausgleichsmechanismus (CBAM), um das Spielfeld zu ebnen und ihre Eigenmittel zu erhöhen. Die Autoren weisen allerdings darauf hin, dass unilaterale europäische klimapolitische Maßnahmen, ob nun mit einem CBAM abgesichert oder nicht, nur eine begrenzte Rolle bei der Reduzierung der globalen CO2-Emissionen spielen können. Ein EU-Grenzausgleich kann das so genannte indirekte Leakage nicht stoppen, er hat unklare Auswirkungen auf die klimapolitischen Anstrengungen anderer Länder und birgt das Risiko von Konflikten mit Handels-partnern. Sie schlagen daher vor, dass die EU zusammen mit den USA und anderen gleichgesinnten Ländern daran arbeiten sollte, einen Klima-Club mit einem gemeinsamen CO2-Mindestpreis und einem gemeinsamen CBAM gegenüber Drittländern zu gründen. Ein solches Rahmenwerk würde Anreize für andere Länder schaffen, sich dem Klub anzuschließen, während es gleichzeitig das Leakage-Risiko begrenzt und das Risiko von handelspolitischen Streitigkeiten verringert.

Place-based policies had a bad reputation for decades, if they received any attention at all. This has recently changed, for two reasons. First, many countries have experienced political backlashes from rising spatial economic disparities. Populist movements received the highest support in economically backward regions, which had been hit by severe local shocks. By trying to foster spatial economic cohesion, regional policies have become an attempt to insure against those political trends and to save liberal democracies altogether. Second, recent theoretical and empirical research has challenged the leading paradigm of spatial equilibrium analysis, according to which place-based policies are an inefficient interference into the market-based resource allocation. In this paper, I review those arguments and how their balance has changed over time. I argue that the demand for place-based policies is likely to increase in the future, as new digital technologies might reinforce urban-rural divides. But even if the general case for place-based policies now seems to be more widely accepted, the question remains what exactly should be done and which type of programs generate the highest return. Digging through the vast evaluation literature, I try to derive some robust lessons how to conduct place-based policies in practise.

Klimapolitik spielt in den Koalitionsverhandlungen in Deutschland eine wichtige Rolle. Sie muss jedoch europäisch und letztlich global gedacht werden. Europa kann bei Technologien für CO2-Reduktion und für die Anpassung an Klimaerwärmung eine führende Rolle einnehmen. Der CO2-Preis ist das zentrale Instrument für diese Politik. Das ETS-System sollte alle Sektoren einschließen. Einnahmen aus dem CO2-Preis müssen an die privaten Haushalte und die Unternehmen, zurückfließen, um sozialen Ausgleich und die Wahrung der Wettbewerbsfähigkeit der europäischen Industrie zu gewährleisten. Das muss von öffentlichen und privaten Investitionen flankiert werden. Zur Finanzierung sollte der bestehende europäische Aufbaufonds Next Generation EU genutzt werden, außerdem sollten die europäischen Verschuldungsregeln Spielräume vorsehen, ohne dass Zweifel an der Solidität der Staatsfinanzen entstehen.

The study will first outline the way in which Germany's fiscal policy was driven for several dec-ades by a paradigm that centered on deficit control and reduced state involvement in the econ-omy. It will assess the damage wrought by this strategy - for example, underinvestment in in-frastructure and the worsening of the financial situation in many local municipalities. After-wards, we sketch out a new framework for fiscal policy that might take the evaluation of public needs and the need for more public investment as starting points. The study will also address the response to the Corona pandemic and in what sense it reinforces the need for a new fiscal paradigm. What are the implications of such a shock for fiscal policy rules? And how should Germany and the European Union handle the enormous public debt incurred during this crisis?

We study the impact of a recent digital automation technology - industrial robotics - on the distribution of sales, productivity, markups, and profits within industries. Our empirical analysis combines data on the industry-level stock of industrial robots with firms' balance sheet data for six European countries from 2004 to 2013. We find that robots disproportionally raise productivity in those firms that are already most productive to begin with. Those firms are able to increase their markups and overall profits, while they tend to decline for less profitable firms within the same industry, country and year. We also show that robots contribute to the falling aggregate labor income share through a rising concentration of industry sales in highly productive firms with low firm-specific labor shares. In sum, our paper suggests that robots boost the emergence of superstar firms within European manufacturing, and thereby shifts the functional income distribution away from wages and towards profits.

[Einleitung] Am 2. August 2019 notierte die dreißigjährige Bundesanleihe an den Finanzmärkten erstmalig zu einem Zinssatz von null. Damit lag die gesamte deutsche Zinsstrukturkurve im negativen Bereich. Kurz zuvor wurde am 4. Juli 2019 die zehnjährige Bundesanleihe zu einem nominalen Zinssatz von -0,4 Prozent gehandelt, identisch zur Einlagefazilität der EZB. Mit anderen Worten: die Märkte bieten dem deutschen Staat eine Prämie, damit sie ihm Geld anvertrauen dürfen. Leiht sich der Bund heute einen Euro, muss er in dreißig Jahren bei einer Inflationsrate entsprechend des 2-Prozent-Zielwerts bloß einen realen Gegenwert von knapp 56 Cent refinanzieren. Der Bund ist damit einer der kreditwürdigsten Schuldner weltweit. Die im Grundgesetz verankerte Schuldenbremse verbietet es ihm aber weitestgehend, von diesem privilegierten Status Gebrauch zu machen. Die Verankerung in Artikel 115 GG erfolgte im Zuge der Föderalismus-Kommission im Jahr 2009. Seit dem Jahr 2011 entfaltet diese Regelung sukzessive ihre bindende Wirkung für den Bund und die Länder. Infolge der Wirtschafts- und Finanzkrise war die Schuldenstandquote innerhalb kurzer Frist von 63 Prozent im Jahr 2007 auf den historischen Höchstwert 82,5 Prozent im Jahr 2010 angestiegen. Die Sorge um die finanzpolitische Handlungsfähigkeit dominierte seinerzeit die öffentliche Diskussion. Vorbild war die Schweiz, die im Jahr 2001 per Volksabstimmung eine Ausgabenregel eingeführt hatte. Allerdings wird dort - anders als in Deutschland - nicht direkt die öffentliche Kreditaufnahme reguliert, sondern die Entwicklung der zulässigen Ausgaben an die der konjunkturbereinigten Einnahmen gebunden. Die deutsche Schuldenbremse billigt hingegen dem Bund in konjunkturell normalen Zeiten eine strukturelle Verschuldung von maximal 0,35 Prozent des Bruttoinlandsprodukts (BIP) zu, aktuell rund 12 Milliarden Euro jährlich. Die Länder dürfen gar keine strukturellen Budgetdefizite mehr ausweisen. Diese Regelung würde bei Ausnutzung der Spielräume und angenommenen 3 Prozent Trendwachstum des nominalen Bruttoinlandsprodukts langfristig zu einer Schuldenstandquote von nur noch knapp 12 Prozent führen. Die Fortführung der noch weiter gehenden Politik der "schwarzen Null", die grundsätzlich auf Budgetdefizite verzichtet, würde irgendwann sogar eine komplette Entschuldung implizieren. Dieser weitestgehende Verzicht auf öffentliche Verschuldung ist unter theoretischen Gesichtspunkten prinzipiell zweifelhaft, er wird angesichts der aktuellen Zinskonstellationen und der großen strukturellen Investitionsbedarfe, die es in Deutschland in vielen Bereichen gibt, jedoch äußerst fragwürdig.

Deutschland ist ein Land mit einer Vielzahl an prosperierenden Regionen und Wirtschaftszentren. Doch die Ausgangslage und die Perspektiven sind nicht überall positiv. Denn gleichzeitig gibt es ökonomisch schwache Städte und Landstriche mit erheblichen Entwicklungshemmnissen. Während etwa viele Großstädte immer weiter wachsen, verlassen gerade junge und gut ausgebildete Menschen ländlich geprägte oder strukturschwache Regionen. Und während die Arbeitslosigkeit im wirtschaftlichen Boom der letzten Jahre vielerorts deutlich zurückgegangen ist, hat es anderswo kaum nennenswerte Verbesserungen gegeben. Es ist die Aufgabe der Regionalpolitik, solche Disparitäten zu erkennen und zu beheben - und damit den gesellschaftlichen Zusammenhalt zwischen Aachen und Zittau, Waterkant und Alpenrand zu stärken. Doch was sind realistische Ziele für die Regionalpolitik? Welche Regionen sollten besonders unterstützt werden - und mit welchen Instrumenten? Mit diesen und weiteren Grundsatzfragen beschäftigt sich die vorliegende IW-Studie. Im ersten thematischen Block beleuchten die Autoren die theoretischen und normativen Grundlagen der Regionalpolitik. Es zeigt sich, dass gerade die Tertiarisierung, die Digitalisierung und der Übergang zur Wissensgesellschaft das Auseinanderdriften der Regionen vorantreibt. Aus normativer Sicht wird dargelegt, dass Mindeststandards für die Versorgung in der Fläche konsensfähig sind und der Staat darüber hinaus wirtschaftliche Aktivitäten in strukturschwachen Regionen anregen kann, etwa durch die Gründung von Hochschulen. Aus verfassungsrechtlicher Sicht gibt es eine breite Grundlage für staatliches Handeln, da das Grundgesetz der Politik in diesem Bereich große Handlungsspielräume gewährt - auch und gerade bei der Schaffung "gleichwertiger Lebensverhältnisse". (...) Germany is a country with a large number of prospering regions and economic centres. Yet not everywhere are either the current situation or the outlook for the future positive. There are cities and regions where development faces considerable hurdles. While many of the country's cities are enjoying ongoing growth, there is a trend, particularly among the young and the well-educated, away from rural and structurally weak regions. And while the booming economy of recent years has brought a significant drop in unemployment in many places, in other respects there have been few improvements of note. The task of regional policy is to identify and eliminate such disparities. But what are realistic objectives for regional policy? Which regions deserve particular support - and with what instruments? The present IW Study tackles these and other fundamental questions. In the first thematic block, the authors discuss the theoretical and normative foundations of regional policy. Here it can be seen that it is precisely the motors of modernisation - tertiarisation, digitisation and the transition to a knowledge society - that are driving the regions apart. From a normative point of view, consensus can be reached on minimum standards for the nationwide provision of services and on government stimulation of economic activity in structurally weak regions. From a constitutional point of view, there is a broad basis for government intervention, since Germany's Basic Law grants policymakers considerable leeway in this area - not least, and indeed especially, where the establishment of "equal living conditions" is concerned. (...)

Economic development in industrialized countries is characterized by rising per capita GDP, increasing life expectancy, and an ever larger share of the population living in cities. We explain this pattern within a regional innovation-driven economic growth model with labor mobility and a demographic structure of overlapping generations. The model shows that there is a natural tendency for core-periphery structures to emerge in modern knowledge-based economies.

The German economy exhibits rising service and declining manufacturing employment. But this decline is much sharper in import-competing than in export-oriented branches. We first document the individual-level job transitions behind those trends. They are not driven by manufacturing workers who smoothly switch to services. The observed shifts are entirely due to young entrants and returnees from non-employment. We then investigate if rising trade with China and Eastern Europe causally affected those labor flows. Exploiting variation across industries and regions, we find that globalization did not speed up the manufacturing decline in Germany. It even retained those jobs in the economy.

We study the impact of rising robot exposure on the careers of individual manufacturing workers, and the equilibrium impact across industries and local labor markets in Germany. We find no evidence that robots cause total job losses, but they do affect the composition of aggregate employment. Every robot destroys two manufacturing jobs. This accounts for almost 23 percent of the overall decline of manufacturing employment in Germany over the period 1994-2014, roughly 275,000 jobs. But this loss was fully offset by additional jobs in the service sector. Moreover, robots have not raised the displacement risk for incumbent manufacturing workers. Quite in contrast, more robot exposed workers are even more likely to remain employed in their original workplace, though not necessarily performing the same tasks, and the aggregate manufacturing decline is solely driven by fewer new jobs for young labor market entrants. This enhanced job stability for insiders comes at the cost of lower wages. The negative impact of robots on individual earnings arises mainly for medium-skilled workers in machine-operating occupations, while high-skilled managers gain. In the aggregate, robots raise labor productivity but not wages. Thereby they contribute to the decline of the labor income share. Wir untersuchen die Auswirkungen des Einsatzes von Industrierobotern auf die Erwerbsverläufe einzelner Beschäftigter im verarbeitenden Gewerbe, sowie die Auswirkungen auf lokale Arbeitsmärkte in Deutschland. Wir finden keine Anhaltspunkte dafür, dass Roboter insgesamt zu Jobverlusten führen, allerdings verändern sie die Struktur der Gesamtbeschäftigung. Jeder Roboter verdrängt zwei Jobs im verarbeitenden Gewerbe. Damit tragen Roboter mit etwa 275.000 Jobs zu nahezu 23 Prozent des gesamten Rückgangs der Beschäftigung in diesem Sektor bei. Dieser Rückgang wurde jedoch vollkommen durch zusätzliche Jobs im Dienstleistungssektor kompensiert. Dies geht nicht zu Lasten bereits beschäftigter Personen: Beschäftigte in Branchen, die verstärkt Roboter einsetzen hatten sogar eine höhere Beschäftigungsstabilität bei ihrem ursprünglichen Arbeitgeber. Wir beobachten dagegen einen systematischen Rückgang von Neueinstellungen in diesen Branchen. Die höhere Beschäftigungsstabilität ist oftmals mit geringeren Löhnen verbunden. Vor allem die Löhne von Personen mit Ausbildungsabschluss in Fertigungsberufen geraten durch den Einsatz von Robotern unter druck. Bei Managern und Ingenieuren sind dagegen steigende Löhne zu verzeichnen. Im Aggregat führen Roboter also zu einem Anstieg der Arbeitsproduktivität, aber nicht zu einem Anstieg der Löhne. Damit tragen sie zum Rückgang der Lohnquote bei.

Wir beschreiben den Einfluss der Globalisierung auf dem westdeutschen Arbeitsmarkt. Als Verliererregionen identifizieren wir das Ruhrgebiet, die Pfalz und Oberfranken. Die Gewinnerregionen liegen vor allem in Bayern und Schwaben. Unter dem Strich hat das verarbeitende Gewerbe in Deutschland durch den intensivierten Handel mit China und Osteuropa gewonnen, während der Arbeitsmarkt in den USA und in anderen europäischen Ländern stärker negativ betroffen war. Dies könnte ein Grund sein, warum Handelsprotektionismus in der politischen Diskussion hierzulande eine weniger wichtige Rolle spielt als anderswo. Dennoch sollte die Wirtschaftspolitik die Kompensation von Globalisierungsverlierern ernster nehmen als bisher. We describe the impact of globalization across West German regional labour markets. The main losers are the Ruhr area, the Pfalz and Oberfranken. The main winning regions are located mainly in Bavaria and Swabonia. The German manufacturing sector at large has gained from rising trade exposure with China and Eastern Europe. This is in sharp contrast to the experience of the United States and some European countries. The German experience could be one reason why the political discussion in this country is less prone towards trade protectionism than elsewhere. But policymakers should take the compensation of losers from globalization more seriously than in the past.

We analyze how globalization has affected the sectoral anatomy of regional growth in Germany over the period 1978-2008. The aggregate German economy is characterized by a secular decline of manufacturing and a rise of modern service industries. This trend– also known as Petty's law – is not uniform across space, however. Some regions exhibit it at an even accelerated pace, while other regions have reinforced their manufacturing specializations. We first categorize all German regions into one of three groups, with "protrend", "anti-trend" or "featureless" growth. Afterwards we propose an explanation why a particular region ended up in one of those groups: We argue that the regional profiles of growth and change are systematically related to the initial sizes, and the import and export exposures of the local manufacturing sectors.

In this paper we take a detailed look at the sectoral anatomy of regional growth in German regions over the period 1978-2008. In the aggregate, the German economy is characterized by a secular decline of the manufacturing sector and a rise of the modern service economy. This trend of structural change (Petty?s law) by no means occurs uniformly across space, however. Some regions exhibit this trend even at an accelerated pace, while other regions develop their local economic structures against the trend and expand their manufacturing bases. We first develop a novel empirical approach that allows us to categorize all German regions into one out of three groups with ?pro-trend?, ?anti-trend? or ?featureless? regional growth. ?Pro-trend? regions exhibited a similar direction of industrial change like the nation as a whole, but at an accelerated speed. That is, booming industries tended to grow faster than in the national average while declining industries tended to disappear faster. Conversely, in ?anti-trend? regions industries grew that declined elsewhere, while national boom industries declined. In a second step, we then compare these different groups of regions from a descriptive point of view and report some interesting stylized facts about the initial characteristics and the subsequent growth performances of ?pro-trend? and ?anti-trend? regions. We show, for example, that the ?pro-trend? pattern tends to come with the best overall performance. Yet, this profile where regions forge ahead in developing a modern service economy was neither a guarantee nor a prerequisite for regional success. Many ?anti-trend? regions also had growth rates well above the national average. In other words, we observe strong differences in the sectoral anatomy of growth across regions that performed equally well overall. Finally, investigating the causes of these differential regional trends, we show that the exposure to international trade is an important reason of the divergent patterns of local industrial change.

Why are better educated and more risk-friendly persons more mobile across regions? To answer this question, we use micro data on internal migrants from the German Socio- Economic Panel (SOEP) 2000 - 2006 and merge this information with a unique proxy for region-pair-specific cultural distances across German regions constructed from historical local dialect patterns. Our findings indicate that risk-loving and skilled people are more mobile over longer distances because they are more willing to cross cultural boundaries and move to regions that are culturally different from their homes. Other types of distance-related migration costs cannot explain the lower distance sensitivity of educated and risk-loving individuals.

Using comprehensive data for German establishments (1999-2008), we estimate plant-level production functions to analyze if cultural diversity affects total factor productivity. We distinguish diversity in the establishment's workforce and in the aggregate regional labor force where the plant is located. We find that a larger share of foreign workers - either in the establishment or in the region - does not affect productivity. However, there are strong spillovers associated with the degree of cultural heterogeneity. The aggregate level is, quantitatively, at least as important as the workforce composition inside the establishment. Diversity thus seems to induce externalities beyond the boundaries of a single firm; it improves local business environments.

We develop a new general equilibrium model of monopolistic competition with heterogeneous firms, variable demand elasticity and multiple asymmetric regions, in which trade integration induces wage and productivity changes. Using Canada-US interregional trade data, we structurally estimate a theory-based gravity equation system featuring endogenous wages and productivity. Given the estimated parameter values, we first decompose border effects into a pure border effect, relative and absolute wage effects, and a selection effect. We then quantify the impacts of removing the trade distortions generated by the Canada-US border on regional market aggregates such as wages, productivity, markups, the mass of varieties produced and consumed, as well as welfare. Last, we extend the counterfactual analysis to the firm level by generating productivity distributions and their changes via simulation.

Governments in several countries have recently spent considerable effort to defend domestic firms against acquisition attempts from abroad and instead favoured mergers among national firms. In this paper we offer an explanation why globalization can reinforce the case for promoting “national champions”. We analyze an oligopolistic market where a domestic and a foreign firm are engaged in a takeover battle for a domestic competitor. Any merger or acquisition (M&A) must be approved by the national government whose objective function may include a bias against the foreign takeover. That bias endogenously results from lobbying efforts of the domestic firm that would become the outsider in the foreign acquisition scenario. In the case where the government is unbiased and only cares about welfare we find that falling trade barriers trigger the cross-border acquisition. However, when the domestic government cares sufficiently strongly about lobbying contributions, globalization has a qualitatively different effect. The foreign takeover would then only emerge in an intermediate range of trade costs.Once trade integration reaches a critical level the biased government starts to block the foreign takeover and instead opens the door for the national champion.

We develop a new general equilibrium model of trade with heterogeneous firms, variable demand elasticities and endogenously determined wages. Trade integration favours wage convergence, boosts competition, and forces the least efficient firms to leave the market, thereby affecting aggregate productivity. Since wage and productivity responses are endogenous, our model is well suited to studying the impact of trade integration on aggregate productivity and factor prices. Using Canada-US interregional trade data, we first estimate a system of theory-based gravity equations under the general equilibrium constraints generated by the model. Doing so allows us to measure 'border effects' and to decompose them into a 'pure' border effect, relative and absolute wage effects, and a selection effect. Using the estimated parameter values, we then quantify the impact of removing the Canada-US border on wages, productivity, mark-ups, the share of exporters, the mass of varieties produced and consumed, and thus welfare. Finally, we provide a similar quantification with respect to regional population changes.

In this paper we survey the recent developments in two empirical literatures at the crossroads of labor and urban economics: Studies about localized human capital externalities (HCE) and about the urban wage premium (UWP). After surveying the methods and main results of each of these two literatures separately, we highlight several interrelations between them. In particular we ask if HCE can be interpreted as one fundamental cause of the UWP, and we discuss if one literature can conceptually learn from the methods that are used by the other one.

Governments in several countries have recently spent considerable effort to defend domestic firms against acquisition attempts from abroad and instead favoured mergers among national firms. In this paper we offer an explanation why globalization can reinforce the case for promoting national champions. We analyze an oligopolistic market where a domestic and a foreign firm are engaged in a takeover battle for a domestic competitor. Any merger or acquisition (M&A) must be approved by the national government whose objective function may include a bias against the foreign takeover. That bias endogenously results from lobbying efforts of the domestic firm that would become the outsider in the foreign acquisition scenario. In the case where the government is unbiased and only cares about welfare we find that falling trade barriers trigger the cross-border acquisition. However, when the domestic government cares sufficiently strongly about lobbying contributions, globalization has a qualitatively different effect. The foreign takeover would then only emerge in an intermediate range of trade costs. Once trade integration reaches a critical level the biased government starts to block the foreign takeover and instead opens the door for the national champion.

The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide range of parameters we find that the model exhibits instead a smooth and easily reversible transition from symmetry to agglomeration.

Models of the new economic geography share a number of common conclusions, but also exhibit notable differences, in particular with respect to the shape of the location pattern and the efficiency of the market equilibrium. This reflects the fact that these models rely heavily on specific functional forms. In this paper we approach the properties of the 'footloose entrepreneur' class of new economic geography models with a unifying framework based on the indirect utility function of mobile agents. This approach has several payoffs. We are able to provide general, yet handy, formulae to determine the break point, the bifurcation pattern and the welfare properties of the market equilibrium. Moreover, an application of this framework allows us to show how specific results in the literature can be reconciled as special cases, thereby allowing us to highlight the origin of their differences.

Bei der Entstehung von Ballungsräumen geht die Theorie von einem Kreisprozess aus, der zur Konzentration von Bevölkerung und wirtschaftlicher Aktivität im Raum führt, die sich wiederum weiterverstärkt. Theoretischen Erwartungen entgegen haben nach der Wiedervereinigung regionale Konzentration und Spezialisierung in Deutschland nicht zu- sondern abgenommen. Auch für das Beschäftigungswachstum ist die Bedeutung von Kernstädten eher zurückgegangen. Die größten Beschäftigungsgewinne sind im Umland von Ballungsgebieten und sogar in peripheren Regionen zu verzeichnen. Dieser Befund ist insbesondere für die Beschäftigungspolitik von höchstem Interesse: Es gibt offenbar kein einfaches Erfolgsrezept, das durch die Förderung der industriellen Konzentration positive Beschäftigungseffekte in einer Region garantiert. Die Fokussierung der Förderung auf regionale Spezialisierung und Konzentration greift daher zu kurz. Bei der Verteilung knapper Mittel ist eine nach Branchen und Regionen differenzierte Förderpolitik gefragt, die auch Beschäftigungserfolge verspricht.

The home market effect (HME) is a distinguishing feature of the ?new? theory of international trade, but it is uncertain whether this effect survives if one moves beyond the simplifying setup with only two countries. We present a three -country version of the seminal model by Krugman (1980) and analyse under which circumstances the HME is present once third country effects are taken into account. We show that an exogenous increase in the home country?s expenditure level on the modern good will unambiguously lead to an overproportional output reaction. If production in the foreign world shifts from a more remote to a better accessible economy, industry location in the home country is negatively affected. Thus, if the expenditure increase is small relative to the foreign expenditure shifting, an under-proportion al output reaction in the home country can result. In a more extreme case the industry share of the home country can even decrease. This phenomenon is labelled the ?home market shadow?.

The individual voting behavior on the abolishment of single income-tax exemptions crucially depends on how strongly agents are affected by other deduction possibilities that are not at stake in the reform plans of the government. The interactions depend (i) on the shape of the tax schedule, and (ii) on how the government wants to use the revenue that is generated by the cut of tax privileges. If government plans to increase redistribution in form of lump-sum transfers, then the political chances of a tax reform increase with the existence of other deduction possibilities under progressive taxation. With proportional taxation and a budgetenlargement policy, the voting decision depends only on the particular tax privileges at stake. Matters are different if the government wants to adopt a revenue-neutral tax-cut-cum-basebroadening policy. Except for strong progression, it is less likely that an agent supports the elimination of tax privileges the stronger she is affected by other exemptions in the back.

In this paper we analyze the political economics of different strategies to implement revenue neutral reforms of a complicated income tax system ('tax-cut-cum-base-broadening'). We set up a straightforward social choice model where individuals initially have two deduction possibilities from the tax base. The government wants to cut back the tax base exemptions and it can do so symmetrically or asymmetrically. Asymmetrical approaches face the difficulty that even such individuals can vote against an isolated cut (or an abolishment) of a single tax concession who benefit below average from it. In some constellations a symmetrical cut is in fact the only politically feasible option, whereas all asymmetrical reforms would not be supported by the public.

This paper studies the social desirability of agglomeration and the efficiency arguments for policy intervention in a simple, analytically solvable ?new economic geography? model with two trade integrating regions. The location pattern emerging as market equilibrium is ?bubbleshaped?, i.e. it features dispersion of firms both at high and low trade costs and stable equilibria with partial agglomeration of firms in addition to core-periphery equilibria for intermediate levels of trade costs. Our central finding is that the market equilibrium is characterised by over-agglomeration for high trade costs and under-agglomeration for low trade costs. For very high and very low levels of trade costs as well as for an intermediate range of trade costs, the market equilibrium yields the socially optimal degree of agglomeration. An important implication of this result is that, on efficiency grounds, regional policy should foster the dispersion of firms for a range of high trade costs only, but agglomeration for a range of low trade costs. Hence, regional policies, such as those pursued by the European Union which are aimed at fostering dispersion in general, are counterproductive when trade integration is deep enough.

In the European Union, unemployment rates differ markedly across regions, both within and across nations. This study presents a coherent theoretical approach to explain the emergence and persistence of such regional unemployment disparities. The analysis builds on the wage curve literature, and on regional agglomeration theories like the new economic geography. These theoretical strings are combined and extended, in order to provide a unified framework.

One of the most prominent instruments of regional policy is to foster education and human capital formation in economically lagging regions. However, regional policy of this type can actually hurt instead of help the poor areas. The reason is that individual geographical mobility increases with the personal skill level. Through education subsidies, particularly if targeted on relatively high skilled workers, individuals can cross some threshold level of qualification beyond which emigration accrues. Regional policies then result in a human capital flight harmful to individuals remaining in the economic periphery. This fatal result does not hold for such policies that foster basic education and focus on the relatively low skilled.

An increase in legally binding severance payments creates both an incentive and a disincentive for workers to invest in firmspecific human capital. Which effect prevails on balance depends on the productivity of the worker's human capital investment. For strong positive reactions, increases in severance payments can even be mutually beneficial for workers and firms.

In standard models of New Economic Geography the overall regional price index in the centre is lower than in the periphery, because trade in manufacturing imposes transportation costs whereas trade in agriculture is assumed to be costless. Since real world observations suggest higher overall CPIs in the centre than in the periphery, this paper presents a model where a home goods sector is added. The model is able to explain a sustainable core-periphery structure with higher aggregate CPI in the centre. This structure can emerge endogenously out of the system itself and does not need to exist initially. Hence, the standard model of New Economic Geography can gain realism by the modification proposed in this paper.

The internationalization of firms and the relation to plant and firm performance is the unifying theme of this doctoral thesis. Chapter 2, "The effects of cross-border mergers and acquisitions on the acquirers' domestic performance: firm-level evidence", provides empirical evidence on the effects of M&A on the investing firms' domestic performance in the U.K. and France. A new firm-level dataset is built up that combines a global M&A database with balance sheet data for the years 2000 to 2007. Combining matching techniques with a difference-in-differences estimator, cross-border M&A are shown to boost on average acquirers' domestic sales and investment, and cross-border deals do not appear to be accompanied by a downsizing of the domestic labor force in neither of both countries. Further, acquisitions in knowledge-intensive industries lead to improvements in domestic productivity. The results display some heterogeneity across industries and types of acquisitions, suggesting a connection between the motives for international M&As and their resulting effects. Chapter 3, "Productivity and the internationalization of firms: cross-border acquisitions versus greenfield investments", extends the literature on the determinants of international activity at the firm level towards cross-border acquisitions and greenfield investments as different modes of FDI. Using a rich dataset of British firms, multinationals (MNEs) are shown to be characterized by higher productivity levels than exporters on average. However, the productivity ranking does not hold within all types of industries and across all modes of foreign direct investment. In line with theoretical predictions it matters whether multinational firms engage abroad via greenfield investments or cross-border acquisitions. Cross-border deals involve the most productive firms in sectors with a high share of intangible assets, but the least productive group of all internationally active firms in other industries. Chapter 4, "Who buys who in international trade" makes use of a newly constructed dataset that combines information on both European acquirer and target firms in domestic and cross-border M&A deals with a large group of control firms that are not involved in any acquisition activity. The direct link between the two sides of acquisitions contributes to two research questions. First, the complete productivity ranking of acquirer, target, and domestic firms can be described. In contrast to previous work, the self-selection mechanism of firms into international acquisitions and the cherry-picking of suitable target firms are analyzed simultaneously and for a cross-country dataset. Second, the M&A literature on "who buys who" is extended towards cross-border acquisitions. The distribution of the performance advantage of acquiring firms in direct comparison to their chosen targets in the foreign country is analyzed. Systematic differences in the results show up for domestic and cross-border deals. Chapter 5, titled "Cultural diversity and plant productivity", turns to the analysis of the effects of an internationalized labor force. It extends the literature on the effects of cultural diversity on the economic performance as it analyzes two channels through which a culturally diverse workforce can have an impact on the productivity at the establishment level. The composition of the plants' own workforce, where native and non-native workers from different nations interact directly, influences plant efficiency, but the diversification of the regional workforce at the plants' location can also generate knowledge spillovers. Complementarities in skills and problem-solving abilities stemming from different cultural backgrounds might improve the plants' measured performance, while higher transaction costs due to communication problems probably decrease plant efficiency. Production functions augmented with detailed plant and region workforce information are estimated for a comprehensive sample of German establishments. Potential endogeneity problems are addressed in a System GMM framework. We find positive impacts of a culturally diverse region workforce in particular for small, technology-intensive plants, and in the service sector. The diversity of the own workforce additionally increases the productivity of large, manufacturing plants.

I discuss four theoretical models of international trade with heterogeneous firms à la Melitz (2003, Econometrica). The first chapter represents a critical reconsideration of sector definitions as proposed in the global sourcing model by Antràs and Helpman (2004, Journal of Political Economy). The second model extends the Antràs and Helpman framework by endogenous complexity choice of firms. The third chapter explores the strategic incentive of countries to invest into their technological potential. The last chapter discusses welfare effects of horizontal FDI. Ich entwickle vier Modelle der neueren Außenhandelstheorie mit heterogenen Firmen à la Melitz (2003, Econometrica). Das erste Kapitel stellt einen kritischen Kommentar zu den Sektordefinitionen aus Antràs und Helpman (2004, Journal of Political Economy) dar. Das zweite Modell erweitert den Antràs und Helpman Rahmen um die endogene Komplexitätswahl von Firmen. Das dritte Kapitel untersucht den strategischen Anreiz von Ländern, in ihr technologisches Potenzial zu investieren. Das letzte Kapitel diskutiert die Wohlfahrtseffekte von horizontalen ausländischen Direktinvestitionen.

This dissertation concentrates on the size distribution of cities. From an empirical perspective, it is shown that Zipf's law for cities holds for the upper tail of the distribution and that the overall distribution is the Double-Pareto-Lognormal distribution. From a theoretical perspective, the dissertation builds a dynamic general equilibrium model of random urban growth with endogenous city formation, which explains the empirical finding of a Double-Pareto-Lognormal city size distribution.

Duisburg, Essen, Univ., Diss., 2012 This dissertation concentrates on the size distribution of cities. From an empirical perspective, it is shown that Zipf's law for cities holds for the upper tail of the distribution and that the overall distribution is the Double-Pareto-Lognormal distribution. From a theoretical perspective, the dissertation builds a dynamic general equilibrium model of random urban growth with endogenous city formation, which explains the empirical finding of a Double-Pareto-Lognormal city size distribution.