Local Employment Growth in West Germany: A Dynamic Panel Approach

20 Pages Posted: 8 Sep 2005

See all articles by Uwe Blien

Uwe Blien

Institute for Employment Research (IAB); IZA Institute of Labor Economics

Jens Suedekum

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

Katja Wolf

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Date Written: August 2005

Abstract

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 timing of the impact of diversity and specialisation, as well as of the human capital structure of local industries. Diversity has a positive effect on employment growth in the short run, which is stronger in manufacturing than in services. Concerning specialization we find evidence for mean reversion, which is inconsistent with the idea that growth emphasizes itself. But there is considerable inertia in this process. A positive effect of education is only found in manufacturing. Additionally, we look at the impact of firm size and regional wages on local employment growth.

Keywords: regional labour markets, externalities, local employment growth, dynamic panel estimation, urbanization and localisation effects

JEL Classification: R11, O40

Suggested Citation

Blien, Uwe and Südekum, Jens and Wolf, Katja, Local Employment Growth in West Germany: A Dynamic Panel Approach (August 2005). IZA Discussion Paper No. 1723, Available at SSRN: https://ssrn.com/abstract=799708

Uwe Blien (Contact Author)

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jens Südekum

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Katja Wolf

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

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