Market Access, Regional Price Level and Wage Disparities: The German Case

In this paper we use the NEG framework of the Helpman model to investigate the spatial distribution of wages across German labour market regions under different assumptions. As the assumptions of equal regional price level and equal real wages are strongly rejected for the German economy, standard approaches may fail to reveal the role of market access in explaining regional wage disparities. In part substantial changes occur when market potential is measured with the aid of regional price levels. With the so-called price index approach, the importance of market access in explaining regional wage differentials is clearly revealed. When controlling for heterogeneity of labour force and spatial dependence, the relationship still remains highly significant. From the price index approach, limited demand linkages of reasonable reach are inferred.New Economic Geography, market access, wage disparities, regional price levels

Economic Convergence and Rent-Seeking in Iran

The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. If participation in the labor force is constant, convergence of per capita income is implied. We investigate this hypothesis for the Iranian economy using data on demand deposits as a proxy for GDP. Furthermore, the analysis controls for the effects of rent seeking. Due to its impact on the allocation of resources, rent-seeking is likely an impediment to overall growth. The results support absolute ß-convergence across Iran's provinces and provide some evidence on the adverse effect of rent seeking on regional convergence.Regional convergence, rent-seeking, economic growth

European Regional Convergence in a Human Capital Augmented Solow Model

In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. Furthermore, a geographically weighted regression approach indicates a wide variation in the speed of convergence across the regions, where a higher speed is striking in particular in France and the UK. Clusters of convergence can be identified, where regions with high convergence also have high initial income levels.Solow model, regional convergence, spatial lags, spatial filtering

Spatial Point Pattern Analysis and Industry Concentration

Traditional measures of spatial industry concentration are restricted to given areal units. They do not make allowance for the fact that concentration may be differently pronounced at various geographical levels. Methods of spatial point pattern analysis allow to measure industry concentration at a continuum of spatial scales. While common distancebased methods are well applicable for sub-national study areas, they become inefficient in measuring concentration at various levels within industrial countries. This particularly applies in testing for conditional concentration where overall manufacturing is used as a reference population. Using Ripley’s K function approach to second-order analysis, we propose a subsample similarity test as a feasible testing approach for establishing conditional clustering or dispersion at different spatial scales. For measuring the extent of clustering and dispersion, we introduce a concentration index of the style of Besag’s (1977) L function. By contrast to Besag’s L function, the new index can be employed to measure deviations of observed from general spatial point patterns. The K function approach is illustratively applied to measuring and testing industry concentration in Germany.Spatial concentration, clustering, dispersion, spatial point pattern analysis, K function

Regional Convergence in Germany. A Geographically Weighted Regression Approach

Regional convergence of German labour markets represents a politically important question. Different studies have examined convergence processes in Germany. We derive equations to estimate the speed of convergence on the basis of an extended Solow model. The technique of geographically weighted regression permits a detailed analysis of convergence processes, which has not been conducted for Germany so far yet. It allows to estimate a separate speed of convergence for every region resulting from the local coefficients of the regression equations. The application of this technique to German labour market regions shows regions moving with a different speeds towards their steady states. The half-live times in the model of conditional convergence disperse less than the same coefficients in the absolute convergence model. Moreover, the speed of convergence is substantially slower in the manufacturing sector than in the service sector.

Deutsche Innovationsregionen

Mit der fortschreitenden Ausrichtung der Regionalpolitik auf innovative Netzwerke gewinnt die Abgrenzung von Innovationsregionen - Regionen, die die Informationsverflechtungen im Raum widerspiegeln - an Bedeutung. Die räumlich-ökonometrische Schätzung einer aus der endogenen Wachstumstheorie und Innovationsökonomik hergeleiteten Produktionsfunktion liefert einen signifikanten Regressionskoeffizienten für die Wissensspillover. Dieser wird zur Berechnung einer Spillover-Matrix herangezogen, deren Elemente die Überschwappeffekte zwischen jeweils zwei Regionen angeben. Diese Ähnlichkeitsmatrix mit den Spillover-Effekten wird anschließend einer hierarichischen Clusteranalyse unterzogen. Unterstellt man, dass Innovationsregionen deutlich kleinräumiger als Bundesländer abgegrenzt sind, dann wäre eine 22-Cluster-Variante zu präferieren.Recent developments in the regional policy have stressed the importance of regional networks. Now the definition of innovation regions, which reflect the knowledge spatial activities, is becoming relevant. The spatial econometric estimation of a production function, which is based on endegenous growth theory and innovation economics, yields out a sigificant regression coefficient for the knowledge spillovers. We use this parameter for computing a spillover-matrix, whose elements contain the spillovers between two regions. This similarity matrix is clustered with an agglomerative hierarchical method. If you assume, that innovation regions are smaller than federal states, a 22-cluster-solution would be appropriate

New Economic Geography

The standard model of New Economic Geography (NEG) presents a synthesis of polarization and neo-classical theories. Within a monopolistic competition framework it aims to explain processes of concentration and deconcentration of manufacturing in a two-sector economy. In this paper the effects of several assumptions of spatial agglomeration processes are addressed. In particular, we investigate the effects of transport costs for agricultural goods, spatial spillovers, the presence of non-tradable services and limited mobility of the labour force. It becomes clear that the tendency towards deconcentration of manufacturing is more marked the higher the transport costs for agricultural goods, the stronger the positive spillovers across the regions, the more income spent on services, the more limited the mobility of the labour force.Das Grundmodell der NÖG stellt eine Synthese zwischen der Polarisationstheorie und der Neoklassik dar. In methodisch sehr anspruchsvoller Weise werden (De-) Konzentrationstendenzen der Industrieproduktion erklärt. Hierbei werden jedoch eine Reihe von einschränkenden Annahmen getroffen, die in Widerspruch zur Realität stehen. In diesem Beitrag werden einige von ihnen aufgehoben und ihre Auswirkungen auf räumliche Agglomerationsprozesse untersucht. Im Einzelnen handelt es sich um Transportkosten für Agrargüter, räumliche Überschwappeffekte, die Existenz von nicht handelbaren Dienstleistungen und eine eingeschränkte Mobilität der Arbeitskräfte. Dabei zeigt sich, dass eine Tendenz zur Dekonzentration der Produktion umso ausgeprägter ist, je höher die Transportkosten für Agrargüter sind, je mehr positive Spillovers zwischen den Regionen vorhanden sind, je stärker das Einkommen zum Kauf von Dienstleistungen verwendet wird, je eingeschränkter die räumliche Mobilität der Arbeitskräfte ist

Convergence of EU-regions: A literature report

Convergence studies are concerned with the question of whether poor economies catch-up to wealthier economies over time. The regional convergence process in Europe has generated considerable interest in recent years. Because of financial straits regional convergence is a central question, since important funds aim at diminishing disparities. There are many studies published recently dealing with this issue using different empirical approaches. Especially the β-convergence framework, which was introduced by Barro and Sala-i-Martin, is often used. This paper provides a critical review of the different approaches and summarizes the results. Altogether it can be stated that most models find a slow convergence - global or only referring to some regions (convergence clubs)

Market access, regional price level and wage disparities: the German case

In this paper we use the NEG framework of the Helpman model to investigate the spatial distribution of wages across German labour market regions under different assumptions. As the assumptions of equal regional price level and equal real wages are strongly rejected for the German economy, standard approaches may fail to reveal the role of market access in explaining regional wage disparities. In part substantial changes occur when market potential is measured with the aid of regional price levels. With the so-called price index approach, the importance of market access in explaining regional wage differentials is clearly revealed. When controlling for heterogeneity of labour force and spatial dependence, the relationship still remains highly significant. From the price index approach, limited demand linkages of reasonable reach are inferred