Agglomeration, congestion, and regional unemployment disparities

Regional labor markets are characterized by huge disparities between unemployment rates. Models of the New Economic Geography explain how disparities between regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities between regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. The level and stability of regional labor market disparities depends on the extend of labor market frictions. --regional unemployment,New Economic Geography,core-periphery,wage curve,labor migration

Regional unemployment and new economic geography

Regional labor markets are characterized by huge disparities. The literature on the wage curve argues that there exists a negative relationship between unemployment and wages. However, this literature cannot explain how disparities of these variables between regions endogenously arise. In contrast, the New Economic Geography analyzes how disparities of regional goods markets endogenously arise, but usually ignores unemployment. Therefore, this paper discusses regional unemployment disparities by introducing efficiency wages into the New Economic Geography. This model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs and migration. --regional unemployment,new economic geography,core-periphery,wage curve,labor migration

The Importance of Spatial Autocorrelation for Regional Employment Growth in Germany

In analyzing the disparities of the regional developments in the volume of employment in Germany, in the recent empirical literature so called shift-share-regression-models are frequently applied. However, these models usually neglect spatial interdependencies, even though such interdependencies are likely to occur on a regional level. Therefore, this paper focuses on the importance of spatial dependencies using spatial autocorrelation in order to analyze regional employment development. Spatial dependency in the form of spatial lag, spatial error and cross regressive model are compared. The results indicate that the exogenous variables’ spatial lag sufficiently explains the spatial autocorrelation of regional employment growth.spatial interdependency, spatial autocorrelation, shift-share-regression, regional employment growth

Agglomeration, Congestion, and Regional Unemployment Disparities

Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth.regional unemployment, New Economic Geography, core-periphery, wage curve, labor migration

Agglomeration, Congestion, and Regional Unemployment Disparities

Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth.

Women and work: what role do social norms play?

Against the background of the current economic research which concentrates particularly on individual and structural factors, this paper examines if and to what extent social norms (in terms of attitudes towards gender roles and work commitment) can make a complementary statement in explaining women's employment status. The impact is presumed to be enhanced through norms shared by people belonging to the same households, peer groups, and by residents of the same region. The analysis relies on a rich German dataset and employs a zero inflated negative binomial model. The results highlight, among other things, the importance of 'relevant others' in explaining women's employment status. --women's employment status,households and families,social norms,probit model with sample selection

Women and Work: What Role Do Social Norms Play?

Against the background of the current economic research which concentrates particularly on individual and structural factors, this paper examines if and to what extent social norms (in terms of attitudes towards gender roles and work commitment) can make a complementary statement in explaining women's employment status. The impact is presumed to be enhanced through norms shared by people belonging to the same households, peer groups, and by residents of the same region. The analysis relies on a rich German dataset and employs a zero infl ated negative binomial model. The results highlight the importance of `relevant others' in explaining women's employment status.women's employment status, households and families, social norms, zero in ated negative binominal model

The effect of market access on the labor market: Evidence from German reunification

The New Economic Geography predicts a positive effect of market access on wages, as represented by the wage equation. Several studies provide empirical evidence in favor of the wage equation. However, a key problem is the endogeneity of market access: it is challenging to identify the causal effects of market access on wages, since market access itself depends on wages. Whereas most approaches rely on instrumental variables and strong assumptions on exogeneity, the present analysis relies on German reunification as an exogenous variation of market access in order to identify the effects. Since the market access shock due to reunification was accompanied by a labor supply shock due to migrants and commuters from eastern Germany, the effects on wages, employment and unemployment are analyzed. The results provide evidence in favor of a labor demand shock due to the increase in market access and a labor supply shock due to migrants and commuters from eastern Germany

Agglomeration, Congestion, and Regional Unemployment Disparities

Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth

Monocentric Cities, Endogenous Agglomeration, and Unemployment Disparities

The literature on the wage curve provides considerable evidence in favor of a negative relationship between unemployment and wages. It is thus often seen as a refutation of the Harris-Todaro model, who point to a positive relationship. This paper shows that both strands of literature are special cases of a more general approach by combining a New Economic Geography model with monocentric cities and efficiency wages. Whether the relationship is positive or negative depends on the transportation costs between the cities and commuting costs within them. The model helps explain whether and under which conditions the agglomeration of economic activity is associated with higher unemployment and why controls for agglomeration should be included in wage curve regressions