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This paper reassesses the wage curve applying regional price deflators, whereas in the literature only uniform national price levels are generally used in wage curve regressions. Existing estimates for the unemployment elasticities vary across countries but lie mostly in the neighborhood of −0.1. Using the data for the 49 US states over the 2008–2015 period and 16 Polish NUTS2 regions over the 2000–2015 period, we test the impact of regional prices on the wage curve employing a variety of approaches. We confirm the existence of wage curves for both countries. Following the theory of monopsonistic competition, this inverse relationship stems from the costs faced by both firms and workers. However, the elasticity of local unemployment and spatial spillovers decreases significantly if regional price deflators are applied. This is due to the fact that there exists a negative relationship between regional prices and unemployment.

The German educational system is characterized by a large sector of dual vocational training, which facilitates integration into the labour market. This system creates a specific training market for school leavers, which is characterized by strong regional disparities. These differences as well as their consequences have not been systematically analysed in previous research. In a theory-guided analysis this paper examines empirically which structural ‘handicaps’ affect regional transition rates from school to training and how regional training markets may be classified according to these structural factors. To this end, a new method is applied which combines regression and cluster analysis to avoid arbitrariness in the selection of classification variables. It generates a well-interpretable classification of vocational education markets, which is of broad use in research and labour market policy. The method may be applied to solve a broad variety of similar research problems in regional science.

In Germany there are considerable disparities between regional labour markets. As local labour market conditions influence the success of labour market policy measures, they must be taken into account when the performance of employment agencies is compared. In its system of management by objectives, the Federal Employment Agency therefore uses classifications of employment agency districts based on a specially designed classification approach. This method is a quite powerful combination of regression and cluster analysis, because the types identified are relatively homogeneous not only with respect to the classification variables but also with respect to the response variable in the regression step. The method can be used to address a wide range of research questions.

This paper analyses how differences in the degree of occupational routine-intensity affect the costs of job loss. We use worker-level data on mass layoffs in Germany between 1980 and 2010 and provide causal evidence that workers who used to be employed in more routine-intensive occupations suffer larger and more persistent earnings losses after the mass layoff. Furthermore, we are able to show that, at least initially, earnings losses are primarily due to a reduction in the number of days in employment, suggesting that routine-intensive workers face considerable frictions in the adjustment to job loss. Conditional on finding a new job, routine-intensive workers are more likely to change their occupations but end up systematically in the lower end of their new occupation's wage distribution.

This paper examines if workers face larger costs from losing their job in a mass layoff whether they were employed in routine-intensive occupations as technological change erodes their employment perspectives outside of their original job. We use worker-level data on mass layoffs in Germany between 1980 and 2010 and provide evidence that workers who were employed in more routine-intensive occupations indeed suffer larger and more persistent earnings losses. We find that earnings losses are primarily due to a reduction in the number of days in employment, suggesting that routine-intensive workers face considerable difficulties in coping with job loss. The additional displacement costs associated with routine intensity have increased over time.

Older population cohorts above the age of 65 are growing disproportionally to younger cohorts generally, and more specifically at the level of subnational regions, although this general trend is he ...

Technological progress can have contradictory effects on employment development. On the one hand there is a substitution effect, because the same product can be produced with less labour. On the other hand there is a compensating effect, because prices will be decreased and therefore product demand and also labour demand will be increased. In the article the relative strength of the two effects is discussed and a brief empirical analysis for Germany is given.

A Standortbestimmung: Herausforderungen am Arbeitsmarkt A.I Einführung und Resümee (Enzo Weber) A.II Der Arbeitsmarkt im Überblick (Enzo Weber) A.III Der Arbeitsmarkt aus regionaler Perspektive (Uwe Blien, Stefan Fuchs und Klara Kaufmann) A.IV Der deutsche Arbeitsmarkt im internationalen Kontext (Thomas Rhein und Enzo Weber) A.V Zentrale Herausforderungen für die Arbeitsmarktpolitik in Deutschland (Enzo Weber) Literatur zu Kapitel A

Since the days of David Ricardo economists have discussed the effects of technological progress on employment. Due to a theorem which can be traced back at least to Neisser (1942), these effects can be related to the elasticity of product demand. In this paper we prove the theorem formally in a modern framework and generalize it to the case of many products. This theorem is relevant in many different regards. In particular it may contribute to a better understanding of regional and national (un-) employment.

A problem encountered in many contexts is the estimation of matrices or tables from aggregate, heterogeneous, incomplete and contradictory information. In this paper the Adeton method is presented which can be used for this estimation task under quite general conditions. The Adeton method was originally developed to estimate flow matrices of regional labour markets in the Multi-Accounting System (MAS). However, it is applicable for many purposes, e.g. to estimate contingency tables or input-output and other flow matrices. Adeton is based on a Bayesian inference model: Given a prior probability distribution on the set of possible matrices and information about the actual matrix consisting of a set of linear equality and inequality constraints, the complete matrix with highest posterior probability is calculated. The advantage of the Adeton approach is that it is possible to specify soft constraints which are obeyed only up to a certain degree. It is shown that Adeton is an estimation method of entropy optimization type and in this respect is a generalization of the well known Iterative Proportional Fitting Algorithm (used in log-linear models) or of the equivalent RAS method (used in input-output analysis).

"In ihrer Einfuhrung zu einem Schwerpunktheft geben die Autoren einen Uberblick uber die Beitrage, welche sich mit der Analyse regionaler Arbeitsmarkte befassen. Diese entstammen der 4. Internationalen Sommerkonferenz zur Regionalwissenschaft in Dresden 2011. Die sechs Einzelbeitrage widmen sich folgenden Themen der regionalen Arbeitsmarktanalyse: Beschaftigungsentwicklung, Lohnentwicklung, Arbeitssuche und Arbeitsmigration."

Summary The last decade has been shaped by dramatic developments in international trade, international investment and production, both in terms of the scale of events and in terms of their qualitative nature. Intriguing questions have been thrown up concerning the labor market impact of these developments, notably welfare issues (the evolution of real wages, employment and unemployment), the distribution of income (the wage structure) and employment volatility. Path-breaking innovations in the theories of trade, location and the multinational firm allow a fresh look at these labor market effects. This paper takes stock of these theoretical innovations and contrasts these with the recent empirical research efforts to uncover the labor market implications of trade and FDI. We identify research gaps and highlight promising avenues for future research.

This Manifesto provides a joint proposal to create a Regional Science Academy as a think-tank support platform for a strategic development of the spatial sciences. The Regional Science Academy is a strategic spatial knowledge catalyst: it acts as a global intellectual powerhouse for new knowledge network initiatives and scholarly views on regions and cities as vital centrepieces of interconnected spatial systems. This contribution highlights its role and presents various activity plans.

The wage curve postulates that the wage level is a decreasing function of the regional unemployment rate. In testing this hypothesis, most studies have not taken into account that differences in the institutional framework may have an impact on the existence (or the slope) of a wage curve. Using a large-scale linked employer–employee dataset for Western Germany, this article provides a first direct test of the relevance of different bargaining regimes (and of works councils) for the existence of a wage curve. In pooled regressions for the period 1998 to 2006, as well as in worker-level or plant-level fixed-effects estimations, we obtain evidence for a wage curve for plants with a collective bargaining agreement at firm level. The point estimates for this group of plants are close to the −0.1 elasticity of wages with respect to unemployment postulated by Blanchflower and Oswald. In this regime, we also find that works councils dampen the adjustment of wages to the regional unemployment situation. In the other regimes of plants that either do not make use of collective contracts or apply sectoral agreements, we do not find a wage curve.

In many countries regional disparities are fairly large and persistent. Often classification systems are needed to provide succinct information on these disparities. This paper presents a model-based classification system which is designed to assess labour market conditions which influence the outcomes of active labour market policy. The innovation in this paper is the development of a procedure that combines a theory-guided analysis of determinants of regional disparities with standard classification approaches. The procedure is designed to resolve two limitations inherent in many existing classification schemes: first, their purely descriptive nature and second, the lack of a theoretically meaningful organization of the variable selection process. Resumen En muchos paises las disparidades regionales son muy grandes y persistentes. A menudo son necesarios sistemas de clasificacion que proporcionen informacion sucinta sobre tales disparidades. Este articulo presenta un sistema de clasificacion basado en un modelo, disenado para evaluar aquellas condiciones del mercado laboral que influyen en los resultados de politicas activas del mercado laboral. La innovacion de este articulo es el desarrollo de un procedimiento que combina un analisis de orientacion teorica de los determinantes de las disparidades regionales con enfoques estandar de clasificacion. El procedimiento esta disenado para resolver dos limitaciones inherentes a muchos sistemas de clasificacion: primero, su naturaleza puramente descriptiva y segundo, la falta de organizacion teoreticamente significativa del proceso de seleccion variable.

"Themes of the paper are differences in unemployment rates between East and West Germany and the spatial differentiation in the East. 20 years after the fall of the Berlin Wall there is still a strong division between the economies and labour markets of Eastern and Western Germany. In the last few years, however, unemployment has been reduced especially in the East. Within Eastern Germany a strong variation of labour market situations is visible, which has been relatively stable in time. In the paper special approaches of regional economics are used to understand the situation. In addition, a spatial econometrics framework is applied." (Author's abstract, IAB-Doku) ((en))

Blanchflower and Oswald [Blanchflower, David G. and Oswald, Andrew J., 1994a, The Wage Curve, (Cambridge, MA, MIT Press), Blanchflower, David G. and Oswald, Andrew J., 1994b, Estimating a Wage Curve for Britain 1973–90, The Economic Journal 104, 1025–1043. Eine praktische Einfuhrung, Nurnberg] reported that they have found an ‘empirical law of economics’ — the Wage Curve. Our paper reconsiders the western German Wage Curve using disaggregated regional data and is based on almost one million employees drawn from the Federal Employment Services of Germany over the period 1980–2004. We find that the wage equation is highly autoregressive but far from unit root. The unemployment elasticity is significant but relatively small: only between − 0.02 and − 0.04. We also check the sensitivity of this elasticity for different population groups (young versus old, men versus women, less educated versus highly educated, German native versus foreigner), confirming that it is stronger the weaker the bargaining power of the particular group.

We analyse whether wage differences between cities and rural areas in western Germany are due to unobserved differences in regional price levels. Since regional prices are available for only 10% of the regions we use multiple imputation to generate prices for all regions. Our results show that the nominal agglomeration wage differential is 25%, whereas the real differential is 19%. If we control for the composition of the labour force and jobs, the real wage differential is 4%. If we additionally control for differences in regional building land prices the agglomeration wage differential vanishes.

Following Blanchflower and Oswald, a “wage curve” describes the wage level as a downward-sloping convex curve of the regional unemployment rate. This article makes two major contributions in the analysis of the wage curve. First, it is recognized that potential endogeneity of the regional unemployment rate should be subject to testing not only in combination with regional-specific effects but also in combination with time-specific effects. For this purpose, the authors develop a new estimator, the spatial first difference 2SLS estimator. Second, it is recognized that wages may not only respond to the regional but also to the national unemployment rate. In the empirical analysis, the wage curve for East Germany is estimated using a comprehensive database that provides panel data classified into 114 administrative districts during the 1993 to 1999 period.

Nach dem Mauerfall flossen umfangreiche öffentliche und private Investitionsmittel in die ostdeutsche Wirtschaft. Dies hatte einen wirtschaftlichen Aufschwung zur Folge. Begünstigt durch die Art der Privatisierung ostdeutscher Firmen entstanden jedoch vielfach 'verlängerte Werkbänke' westdeutscher Unternehmen, während die Zentralen und Entwicklungsabteilungen der Unternehmen in der Regel weiterhin im Westen angesiedelt waren. Vor diesem Hintergrund ist es der ostdeutschen Wirtschaft bis dato schwergefallen, ihren Innovations- und Produktivitätsrückstand aufzuholen. Für die Zukunft bieten sich verschiedene Ansatzpunkte, um die wirtschaftliche Leistungsfähigkeit Ostdeutschlands zu steigern.

In times of high and persistent unemployment, it has become one of the most important policy tasks in many developed countries to trigger a process of sustained employment growth. An illustrative example is the policy of regional “growth-poles”, which assumes that a local concentration of a specific industry in a limited geographical area will lead to a growth take-off. The theoretical rationale for this type of regional policy can be knowledge spillovers, whose importance for the economic (employment) growth has been emphasised in the endogenous growth literature. Yet, there is a considerable debate about the precise nature of knowledge spillovers. Do the externalities accrue between sectors (Jacobs-externalities), or are they rather intra-sectoral (MAR-externalities)? Apart from the question what local economic structure is conducive for employment growth, an equally important issue concerns the timing of the impact of externalities. Is it the current economic structure that matters for employment growth, or rather the historical economic structure? If the former turns out to be the case, regional policies might become effective immediately. In the latter case the impact of policy might be slower but also longer lasting. In this paper we study the dynamics of local employment growth in West Germany from 1980 to 2001. Using dynamic panel techniques, we analyse the nature and the timing of Jacobs- and Marshall-Arrow-Romer externalities, as well as the impact of general human capital spillovers. Jacobs-externalities are stronger in manufacturing than in services, the opposite is true for MAR-externalities. General human capital spillovers are only found in manufacturing. The influence of all forms of externalities rapidly decays in time, suggesting that they are rather static than dynamic. Additionally, we look at the impact of competition, general agglomeration effects and overly high regional wages on local employment growth.

In this paper, a set of neural network (NN) models is developed to compute short-term forecasts of regional employment patterns in Germany. Neural networks are modern statistical tools based on learning algorithms that are able to process large amounts of data. Neural networks are enjoying increasing interest in several fields because of their effectiveness in handling complex data sets when the functional relationship between dependent and independent variables is not specified explicitly. The present paper compares two NN methodologies. First, it uses NNs to forecast regional employment in both the former West and East Germany. Each model implemented computes single estimates of employment growth rates for each German district, with a 2-year forecasting range. Next, additional forecasts are computed, by combining the NN methodology with shift-share analysis (SSA). Since SSA aims to identify variations observed among the labour districts, its results are used as further explanatory variables in the NN models. The data set used in our experiments consists of a panel of 439 German (NUTS 3) districts. Because of differences in the size and time horizons of the data, the forecasts for West and East Germany are computed separately. The out-of-sample forecasting ability of the models is evaluated by means of several appropriate statistical indicators.

Using a regression analogue of the shift-share technique we address the explanatory power of various theories about regional differences in employment growth in eastern German districts from 1993 until 2001. We find that overly high regional wages are more important than differences in the qualification, firm-size or industrial structures. The most important source of disparities, however, is the dispersion of idiosyncratic location effects. This suggests that individual districts differ markedly in their capacity to generate employment growth and illustrates the importance of a regional perspective when it comes to the employment problem in eastern Germany in general.

By using a shift-share regression approach the contribution of services to the development of employment in eastern Germany is analysed. The results obtained with highly differentiated data from the employment statistics show that services contributed more to a favourable path of development than other industries. This is due in part to general world-wide processes of structural change and the special situation in eastern Germany. Many subsidies were transferred to the East, which stabilises the special segment of the economy related to local demand. This segment is made up mostly of services in eastern Germany. Processes of industrial change can be explained using structural change approaches. It is shown that processes of de-concentration play a role in explaining regional disparities, since inverse localisation and positive urbanisation effects are visible. For the empirical analyses an augmented approach is applied which uses a generalisation of an econometric analogue from the common shift-share meth...

This article shows how the impulses of the transformation process in eastern Germany have spread through the economy and the labour market. The form of transformation has long-term effects on the form of control over the economy; it is managed largely from western firms. This fact has manifold consequences for the innovation behaviour of plants, among others, which in turn is further related to productivity and thus to the labour market. We argue that this transfers further to persistently lower wages and higher unemployment rates in eastern compared with western Germany.

Using the IAB Establishment Panel, which is representative for western Germany, the authors find that establishment-level wages reacted to variations in the regional unemployment rate. The elasticity of wages with respect to unemployment, they estimate, was about −0.1. This responsiveness of the wage to regional variation is close to estimates found by other researchers (using individual rather than establishment data) for other countries, and contradicts the view that Germany's labor market, largely due to the nature of collective bargaining in that country, is relatively inflexible. Possible explanations for this finding are that the negotiated wage is treated like a minimum wage, with firms deviating from it in order to increase work effort; bargaining between firms and individual workers or between firms and works councils produces wage differences; or collective agreements do not restrict firms to the extent that is often assumed.

The paper provides an outline of a method useful for forecasting problems. The approach is based on a combination of top-down and bottom-up techniques. It is applied to project employment in all 327 (western) German districts for a time span of two years. The most important step in the preparation of the forecast uses the ENTROP method, which is an entropy optimizing procedure, a generalization of common RAS techniques, newly developed for the estimation of matrices from heterogeneous information. In a defined sense the estimated matrix is the most probable one. The method chosen is very flexible and uses any available information extensively. Therefore, the estimates are reliable as is shown in an ex-post forecast. There is a double purpose for the forecast of employment. First, it helps to gain insights in the causal processes generating regional developments and spatial disparities on labour markets. Second, it is useful for regional labour market policies, e.g. the budgetary planning of the Federal Em...

This paper examines the East German wage curve using the employment statistics of the Federal Employment Services of Germany (Bundesanstalt fur Arbeit) over the period 1993–1998. The six waves of this panel include a total of 32,188,684 individual employment spells. The statistics comprise the entire population of people gainfully employed and included in the social insurance system. These are classified into 114 administrative districts (Landkreise). Taking into account the endogeneity of unemployment as well as controlling for region and time effects, this paper finds support for the wage curve in East Germany. The overall unemployment elasticity estimate is −0.15 and is higher for female workers than male workers.

This paper examines the German wage curve using the Institut fur Arbeitsmarkt und Berufsforschung (IAB) employment sample over the period 1981–1990. A random sample of 6590 employees covering 142 labor market regions over a ten year period is considered. The total number of observations is 40 852. Taking into account the endogeneity of unemployment as well as controlling for region and time effects, this paper finds support for the wage curve in Germany. The overall unemployment elasticity estimate is −0.07 and is higher for younger workers than older workers. The wages of less qualified workers are more responsive to local unemployment rates than the wages of more qualified workers. Also the wages of men are slightly more responsive to local unemployment rates than the wages of women. Ignoring endogeneity of the local unemployment rate yields results in favor of the wage curve only for younger and less qualified workers. Accounting for endogeneity of the unemployment rate yields evidence in favor of the wage curve across all types of workers.

One of the key issues in economics is the explanation of unemployment and its variation across different economies. Doing so, modern mainstream macroeconomics refers to the effects of financial crises and to institutional structures and their variation across countries. However, unemployment within the European states varies nearly as much as between these countries. In the interior of a country, however, there are only minor differences in institutions. Therefore, the large variation in regional unemployment and in the development of employment is puzzling. Our explanation of this regional variation of unemployment builds on the regional industry composition and technological progress. It is shown formally that under very general and standard preconditions the elasticity of demand on product markets is decisive: Technological progress leads to an expansion of employment if product demand is elastic. It is accompanied, however, by shrinkage of employment if product demand is inelastic. A transition from the elastic into the inelastic range of the demand function for the most important product(s) can already suffice to plunge a region into crisis. In our empirical analysis we use industry level time series data on output, prices, employment and national income for Germany provided by the Federal Statistical Office and the OECD. We estimate Marshallian type demand functions using an instrumental variables estimator to derive the price elasticities for different industries and link this information to the regional labour market performance of the respective industries and regions.

This paper presents an outline of the so-called Shift-Share Regression and an application of this method to the analysis of employment development. The method used is not a deterministic decomposition such as the classical Shift-Share-Analysis, but a powerful, yet simple and flexible econometric tool to test theory-related hypotheses, which can be applied as a 'work-horse' in studies of many kinds. Classical deterministic Shift-Share-Analysis has often been criticised, since it does not permit a model-based analysis. The detection of causal effects is at least problematic and the inclusion of additional explanatory variables is possible only in special cases. A major problem is the nature of the method as a deterministic procedure which excludes significance tests. Shift-Share Regression is able to overcome all these critical points. In a basic version it was introduced by Patterson (1991) as a method for analysing and testing regional industrial developments. In contrary to the deterministic Shift-Share-Analysis employment development was examined in a linear model. In Patterson's analysis the industrial sector structure was used as the sole determining factor alongside the location effects and the national trend. We extend this basic structure further: In our case, the effects of sectoral structures, establishment size, qualification structures and locational determinants on employment growth are studied. The regional units used are districts of Western Germany ('Landkreise' and 'kreisfreie Städte'), especially in the present context the districts of the federal State of Bavaria. The analysis is motivated by theoretical considerations of different sources. The most important one refers to theoretical analyses of structural change. According to a specific theorem, the employment effect of technological progress depends on the elasticity of product demand. If demand is inelastic the direct labour saving effect of technological progress is dominating and the effect is negative. Then it is profitable for a firm to reduce its labour force. If, however, demand is elastic a compensating effect dominates. In this case price decreases following higher productivity lead to an extension of product demand which (over-)com¬pensates the direct labour saving effect. Then, it is profitable for a firm to increase the size of its labour force. It can be assumed that in different industries of an economy different demand elasticities are dominating. Therefore, an empirical analysis of employment effects should focus on the industries of an economy. In the paper the sources of different regional employment development in Bavaria are presented, analysed by Shift-Share Regression.

The so-called Shift-Share-Regression is used to analyse the development of employment. This does not imply a deterministic decomposition such as in classical Shift-Share-Analysis (Dunn 1960; Loveridge and Selting 1998). Instead, Shift-Share-Regression is a powerful and flexible econometric tool, which is especially suitable for testing theory-based hypotheses. In a basic version it was introduced by Patterson (1991) as a method for analysing and testing regional industrial developments. In contrary to the deterministic Shift-Share-Analysis employment development was examined in a linear model. In Patterson’s analysis the industrial sector structure was used as the sole determining factor alongside the location effects and the national trend, parallel to those of the deterministic analysis. Moller and Tassinopoulos (2000) extended Patterson’s approach by an additional variable for regional concentration. Further theory-based influences were then integrated in various IAB analyses (Blien and Wolf 2002). Some results of these studies are presented below, following an overview of the method.

In the social sciences and in other fields where data from individual respondents are collected, it is an important concern that information remains confidential and that the identity of individual data providers is not disclosed. For several realistic scenarios, the present article examines the risks of discovering the identity of data providers even in cases where the microdata have been previously anonymized by some procedure. The results show that, even under peculiarly risky conditions, the identification risk is smaller than has been assumed by previous research. The inherent unreliability of measurement is found to be an implicit protection of anonymity and a natural barrier to identification.

Reservation wages indicate the wage threshold for which individual workers are inclined to supply their working capacity. In important theoretical approaches it is assumed that this threshold depends on the unemployment rate. If this is true, the variation of reservation wages might be an important force behind the regional wage curve, which has been estimated in many empirical studies. Up to now, the connection of regional unemployment with reservation wages has not been tested, since research possibilities depend on survey data which were not available. With the Labour Market and Social Security study (PASS), a new large panel survey in Germany, information on regional reservation wages is available. The empirical analysis with this data opens up the black box of the wage generation process and delivers insights about its determining factors. The analysis is based on job matching and efficiency wage theory which are used to derive a relationship between unemployment and reservation wages. Reservationslöhne bezeichnen die Schwelle, ab der Erwerbstätige bereit sind, ihre Arbeitskraft anzubieten. In einigen theoretischen Ansätzen wird angenommen, dass diese Schwelle von der Arbeitslosenquote abhängt. Wenn diese Annahme stimmt, kann die Variation von Reservationslöhnen ein wesentlicher Mechanismus für das Entstehen der Lohnkurve sein, die bereits in vielen empirischen Studien nachgewiesen wurde. Aufgrund der mangelnden Datenbasis konnte der Zusammenhang zwischen regionaler Arbeitslosigkeit und Reservationslöhnen bisher nicht geprüft werden. Mit dem 'Panel Arbeitsmarkt und soziale Sicherung' (PASS), einer neuen großen Panelstudie in Deutschland, sind nun Informationen zu regionalen Reservationslöhnen verfügbar. Die empirische Analyse dieser Daten eröffnet nunmehr den Blick in die Black Box des Lohnentstehungsprozesses und ermöglicht Einsichten in dessen Determinanten. Der Artikel verwendet die Job-Matching- und die Effizienzlohntheorie, um erwartete Zusammenhänge zwischen Arbeitslosigkeit und Reservationslöhnen abzuleiten.