Agglomeration, Growth, and Adjustment: A Theoretical and Empirical Study of Regional Labor Markets in Germany

213 Pages·1999·5.11 MB·English

by  Thiess Büttner (auth.)

ZEW Economic Studies
Publication Series of the Centre for
European Economic Research (ZEW),
Mannheim, Germany
ZEW Economic Studies
o.Hohmeyer,K.Rennings(Eds.)
Man-MadeClimateChange
EconomicAspectsandPolicyOptions
1999.VIII.401pp.ISBN3-7908-1146-7
Thiess Buttner
Agglomeration, Growth,
and Adjustment
A Theoretical and Empirical Study
of Regional Labor Markets in Germany
With 10Figures
and 42 Tables
[W
ZEW
Springer-Verlag ZentrumlOrEuropAische
WiftschaftsforschungGmbH
Berlin Heidelberg GmbH CentreforEuropean
Economic Research
Series Editor
Prof.Dr.Wolfgang Franz
Author
Thiess Büttner
CentreforEuropean Economic Research(ZEW),
L7, I,D-68161Mannheim,Germany
ISBN 978-3-7908-1160-5 ISBN 978-3-642-51188-2 (eBook)
DOI 10.1007/978-3-642-51188-2
Cataloging-in-PublicationDataappliedfor
DieDeutscheBibliothek-CIP-Einheilsaufnahme
Büttner,Thiess:
Agglomeration.growth,andadjustment:atheoreticalandempirieal
studyofregionallabormarketsinGermany;42tablesIThiess
Büttner.ZEW.ZentrumfürEuropäischeWirtschaftsforschung
GmbH.-Heidelberg;NewYork:Physica-Verl.,1999
(ZEWeconomicstudies)
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Preface
Lately,in the context ofagrowing significanceof international economic re
lations locational issues have recovered attention in economics and policy.
As much ofthe recent attention is due to the labor market consequences of
location decisions,the current study isconcerned with the link between the
spatialeconomy and the labor market. With the aim at providing insights
into thedeterminantsofregionallabor marketdisparitythestudyfocuseson
some centralissues,such as location,mobility,and regional wageformation.
From an empirical point of view those issues are quite underexplored, and
often the literature is confined to case studies. Therefore, the study seeks
to giveempiricalcontent to centralhypotheses using regionalpaneldata for
Germany. Leaving many specific questions for further research the study
hopefully demonstrates the usefulness of a regionally disaggregated investi
gationofthelabor market.
The study was accepted as a dissertation at the Faculty of Economics and
Statisticsofthe University ofKonstanz,Germany,at the 24th ofNovember
1997. I would like to express my thanks to my thesis supervisor Professor
Dr. Wolfgang Franz for his support and encouragement. At any time in
my studies at Konstanz he was a thoughtful and patient advisor providing
me with both an inspiring and convivial research environment. I am also
indebtedto ProfessorDr. Hans-JurgenVosgerau,whoundertookthedutyof
the second supervisorandgave severalhelpful hints.
Special thanksfor manyhelpfulsuggestionsand remarksgoto mycolleagues
at the University of Konstanz, in particular to Bernd Fitzenberger. Many
people helped me to collect and prepare the data: Uwe Blien, Wolfgang
Franz,MartinKoller,UdoLehmann, Holger Liischow,Hans-JoachimSchalk,
Helmut Seitz, and Alexandros Thassinopoulos. I also want to mention the
help ofnumerous peopleat the BA and at severalstatisticaloffices. I thank
Fiona Higinson for helping me with the English, the remaining errors and
weaknesses,however,are myown responsibility. Personally,I want to thank
thecrewofSYParsifalfor postponingthelast turn,whichwenowcannever
undertake. Last but not least I thank my wifeClaudia for her patience,her
interest,and her support.
July1998 T.Buttner
Contents
1 Introduction 1
1.1 Regional Disparities in Employment Growth and
Unemployment . . . 4
1.2 Overview of the Study 10
2 Employment in an Interregional
Equilibrium 15
2.1 LocalFactorsand IncreasingReturns. 17
2.2 Economiesof Agglomeration. . . 21
2.2.1 Stability and Adjustment 22
2.2.2 Limits to Concentration . 24
2.3 Localization Economiesfrom the Variety ofGoods 26
2.3.1 A Model with HomogeneousFinal Goods 27
2.3.2 AModel with HeterogeneousFinal Goods 30
2.4 KnowledgeSpilloversand Dynamic Externalities 37
2.5 Empirical Implicationsfor the Employment Pattern 41
3 Employment Location in German
Manufacturing 49
3.1 The RegionalDistribution ofEmployment 51
3.2 The RegionalDevelopment of Employment 59
3.2.1 Descriptionof Data .. 60
3.2.2 Description ofVariables 63
3.2.3 Sectoral Employment Growth 65
3.2.4 Sectoral Growt.hof Establishment Numbers 69
X Contents
3.2.5 Total Manufacturing Employment Growth . 72
3.3 Implicationsfor the Labor Market . 75
4 Interregional Migration in Germany 81
,1.1 General AspectsofMigrationand Employment 82
,1.2 Local DeterminantsofRegional Migration 88
,1.2.1 From Grossto Net Migration 90
,1.2.2 Data and Variables . . . . . . 92
,1.2.3 Estimation ofa Net Migration Equation 94
5 Regional Wage Formation 101
5.1 SourcesofRegional WageFlexibility . . . . . . 102
5.2 Regional Wagesand Central Wage Bargaining. 107
5.2.1 The WageCurve . . 107
5.2.2 The Restricted Firm 109
5.2.3 WageSettingofa Monopoly Union. 111
5.2.4 Implicationsfor the Regional WageLevel 116
6 Regional Wage Flexibility in Germany 121
6.1 ExistingStudies in theGerman Case . . . . . . . 121
6.2 Empirical AnalysisforWest Germany'sDistricts 126
6.2.1 Dataand Variables . . . . . . . 127
6.2.2 BasicWageCurveEstimations 128
6.2.3 SpatialIssuesin the WageCurve 133
6.2.4 DynamicAspects ofRegional Wage Flexibility 141
7 Summary and Outlook 151
A Appendix 155
Sourcesand DefinitionsofData Used in Chapter 1 155
I.l Dataon Employment Change . 155
1.2 Dataon Unemployment . . . . 156
II Sources and DefinitionsofData Used in Chapter 3 156
II.l General District LevelData . . . . . . . . . 156
Contents Xl
Il.2 District Level Datafor Manufacturing Industries 157
11.3 Other Data . . . . . . . . . . . . . . . . . . 159
III Sourcesand DefinitionsofData Used in Chapter 4 160
III.I State LevelData . . 160
IlI.2 District LevelData. 161
1I1.3 Data at the Levelofthe Planning Regions. 162
IlIA Further Data . . . . . . . . . . . . . . . . . 162
IV Sourcesand DefinitionsofData Used in Chapter6 163
V Abbreviationsin theText 165
VI Thbks . .. . . .. . . . . 1~
List ofTables 189
List ofFigures 191
References 193