The evolution of regional labor market disparities

Abstract

"This book deals with the question of whether regional disparities in labor market performance widen, become narrower or remain constant over time. It examines the hypothesis of convergence for the unemployment rates of the German Federal States and employment rates of western German regional planning units. Additionally, skill-specific employment rates are considered in order to investigate the relationship between the change in the skill composition of employment and the development of regional employment disparities. The results for the regional unemployment rates are fairly mixed: they provide no evidence that regional inequality clearly increased or decreased over time. Evidence of convergence is found for regional total and high-skilled employment rates. In contrast, the hypothesis of convergence has to be rejected for regional low-skilled and mediumskilled employment rates. In other words, while the changes in the skill composition of employment do not seem to affect the geographical distribution of employment prospects for total employment, they do seem to have an effect on skill-specific employment prospects across regions. Finally, the relationship between adjustment processes after a region-specific labor demand shock and the existence of regional labor market disparities for western German regional planning units is examined. Unemployment, labor force participation, and labor mobility are considered to be the main adjustment channels in the wake of a region-specific labor demand shock. A panel vector autoregressive (PVAR) model is applied to analyze the role of these labor market measures during the adjustment process in the aftermath of a shock. The results show that slow adjustment processes after a region-specific labor demand shock are a possible explanation for persistent disparities in regional unemployment. As in previous studies, labor mobility is identified as being the main adjustment mechanism in the aftermath of a regional labor demand shock. However, a more detailed look at labor mobility shows that here commuting is more important than migration." (Author's abstract, IAB-Doku) ((en))

Cite article

Werner, D. (2013): The evolution of regional labor market disparities. (IAB-Bibliothek 344), Bielefeld: Bertelsmann, 277 p. DOI:10.3278/300816w