Migration and regional labor market adjustment: Chile 1977–1982 and 1987–1992

The main objective of this paper is to evaluate the migration processes that have been occurring in Chile between 1977–1982 and 1987–1992, as a market mechanism to re-allocate labor among regions. Using traditional consumer theory, a model is developed for a migrant who is evaluating migration. Secondly, this model is estimated, with cross section aggregate data, for both periods using a logit formulation. The results indicate that there is a strong force in the Chilean regional labor market, which serves to concentrate the workforce around the largest populated region of the country. Finally, regional labor markets are simulated to show that migration forces are very weak to arbitrage regional wages and unemployment rate and specific policy is required to promote balanced development across Chilean regions. Received: January 1999/Accepted: August 2001     

Inter-regional labor market equilibrium: another pattern of spatial mismatch

The inability of the free market to lead to a balanced regional labor market equilibrium has been explained to a certain extent by the spatial mismatch hypothesis: “housing segregation” explains a deadlock situation where a “center” with high unemployment and low income coexists with “suburbs” with high labor demand and income. The author proposes a framework for a theoretical general equilibrium model that may explain the existence of a spatial equilibrium with inequalities in employment and income in various regions. This model explains the interregional imbalances on the labor demand side due to the changes in relative land prices and agglomeration economies and diseconomies in three separate types of economic sectors. On the labor supply side, the model suggests a pattern of a commuting–migration relationship by which labor migrates for housing reasons while retaining present jobs and commuting back to them. Government intervention through influence on travel costs, education, and land allocation can lead to the diminution of such interregional gaps.     

The effects of industrial diversification on regional unemployment in Taiwan: is the portfolio theory applicable?

Unemployment issues, particularly recently, have been the subject of heated rhetoric in Taiwan due to the currently high unemployment rate in this small open economy. This paper investigates regional unemployment in 23 counties or cities from 1982 to 2004. Izraeli and Murphy (Ann Reg Sci 37:1–14, 2003) suggested that the Herfindahl index of industrial structure is positively correlated with the unemployment rate. In this regard, the portfolio theory argues that industrial diversification can only reduce volatility in the regional labor market. In other words, there is a relatively higher regional unemployment rate during periods of economic prosperity and relatively lower unemployment rate during periods of economic slowdown. This view is fully confirmed from the fixed effects model using panel data and the implication is that a comprehensive industrial policy to lower both the unemployment rate and risk in regional labor markets is critical in Taiwan today.     

Regional labor markets in Finland: Adjustment to total versus region-specific shocks

This article analyses regional labor market adjustment in the Finnish provinces during 1976–2000. We investigate the inter-relations of employment, unemployment, labor force participation, and migration to see how a change in region-specific and total labor demand is adjusted. The analysis reveals that region-specific labor demand shocks adjust mainly via participation, whereas total shocks are adjusted by unemployment. The region-specific component of labor demand shock has shorter-lived effects on unemployment and participation, but its effect on employment is permanent. Conversely, total shocks leave no permanent effect. Migration is more important in the region-specific case where, after a few years, it acquires a large role in the adjustment process.     

Spatial pricing, optimal location and social welfare with consumer arbitrage

This paper provides a comprehensive comparison of the optimal location, output and welfare of spatial discriminatory pricing by integrating consumer arbitrage into the Hwang and Mai (Am Econ Rev 80:567–575, 1990) model. It shows that the presence of arbitrage creates a significant influence on a firm’s locational choice and thus generates different welfare implications. When the discrepancy between the two markets is small, the optimal location and the resulting social welfare level under discriminatory pricing and mill pricing policies remain the same; however, when the discrepancy between the two markets is large, the two pricing policies yield different optimal locations which make the welfare under discriminatory pricing higher than that under mill pricing, hence reversing the support for anti-trust legislation.     

Search unemployment and new economic geography

This paper develops a general equilibrium geographical economics model, which uses matching frictions on the labor market to generate regional unemployment disparities alongside the usual core-periphery pattern of industrial agglomeration. In the model, regional wage differentials do not only influence migration decisions of mobile workers, but also affect the bargaining process on local labor markets, leading to differences in vacancies and unemployment as well. In a setting with two regions, both higher or lower unemployment rates in the core region are possible equilibrium outcomes, depending on transport costs and the elasticity of substitution. Stylized facts suggest that both patterns are of empirical relevance.     

Labor market frictions,agglomeration, and regional unemployment disparities

This paper constructs a footloose entrepreneur model with Diamond–Mortensen–Pissarides job search and matching frictions in the manufacturing sector. It captures unemployment adjustment both within the manufacturing sector and in the regional labor market. The within-sector unemployment rate is negatively affected by firm market access and is positively related to the intensity of firm screening among heterogeneous candidate workers. The regional unemployment rate, on the other hand, is related to the sectoral share of job searching across sectors within each region. We find the coexistence of a smaller within-sector unemployment rate and a larger local unemployment rate in the region with firm agglomeration. We also extend the analysis by examining the role of labor market frictions across sectors and the interdependence between agglomeration and unemployment.     

Explaining the pattern of regional unemployment: The case of the Midi-Pyrénées region

Unemployment rates vary widely at the sub-regional level. We seek to explain why such variation occurs, using data for 174 districts in the Midi-Pyrénées region of France for 1990–1991. A set of explanatory variables is derived from theory and the voluminous literature. The best model includes a correction for spatially autocorrelated errors. Unemployment rates are higher in urban areas and, where per capita income is higher, are consistent with the view that unemployment differences largely reflect variations in “amenities.” Along with a lack of evidence of housing market rigidities, these suggest that subregional variations in unemployment are not mainly the result of labor market disequilibrium. Received: 9 July 1999 / Accepted: 30 October 2001     

A study on the building of a new “output–output model” and its usefulness: based on a comparative analysis of the input–output model

This paper describes the building of a new open static “output–output” (O–O) model in comparison to the open static input–ouput (I–O) model developed by Leontief (Rev Econ Stat 18:105–125, 1936). While the I–O model can be characterized as a system that relates final demand to gross output, the O–O model relates gross output for final demand (endogenous or exogenous) to gross output for output (endogenous). We perform a comparative analysis between the two models in structure and characteristics and illustrate the usefulness of the O–O model, for example, by formulating I–O multipliers that can accept output as an initial change. The comprehensive analysis conducted in this paper, including a numerical illustration with an example, shows that the two models form a mutually supplementary relationship and could give rise to a fundamental framework for the analyses of various regional and national economic activities.     

Examining the location factors of R&D labor in the regions of Greece

In this paper two models are developed in an attempt to elucidate the factors that influence the regional distribution of R&D labor across the regions of Greece. The first one is based on an adaptation of the [Guerrero and Seró (1997) Regional Studies 31:381–390] model to the Greek context treating the regional distribution of R&D labor as a function of the extent of agglomeration and the prevailing economic conditions. The second model extends the first one by taking into account two additional factors, viz. the production structure and infrastructure. The econometric results indicate the superior performance of the extended model in the context of Greece as well as attribute the location of R&D labor mainly on the diversification of industrial activity and the number of establishments in innovation-intensive sectors. It is therefore suggested that the stimulation of the regional production structure and infrastructure is essential for ‘knowledge-lagging’ regions.

Agglomeration,job flows and unemployment

This paper examines how job flows and unemployment vary across regions in the context of a New Economic Geography (NEG) model with equilibrium employment. The in-migration that results from agglomeration economies leads to higher rates of both job creation and job destruction. In-migration also leads to lower rates of unemployment suggesting that the regional effects of job creation on unemployment dominate those of job destruction, a result consistent with empirical evidence. Since higher rates of job destruction correspond to higher productivity the results demonstrate that a NEG model can provide a microfoundation for labor market pooling.     

Modeling regional endogenous growth: an application to the non-metropolitan regions of Australia

An exploratory modeling approach to investigate spatial variation in the levels of regional endogenous employment growth and decline over the decade 1991–2001 is developed and applied to an analysis of the non–metropolitan regions (Local Government Areas) in each of the five mainland States of Australia. For the dependent variable, the summation of the regional shift component for change in total employment in major industry sectors¹ over the decade 1991–2001, standardized by the size of the labor force at the beginning of the period, is used as a proxy measure of regional endogenous growth. A general OLS model incorporating a set of 27 independent variables (measuring aspects of industry structure, unemployment, occupational structure, population size and growth, human capital, income distribution, and proximity to the coast and the state metropolitan region) is run, followed by a backward iterative statistical procedure to reduce the complexity of the general model by eliminating statistically insignificant variables to arrive at a specific model for each State. ¹ 17 of the first digit industry sector classifications under ANZSIC93 were used.     

Agglomeration, productivity, and spatial spillovers across Chinese cities

This paper investigates the causal relationship between, and the determinants of, urban labor productivity and industrial agglomeration across Chinese cities. We extend the Ciccone and Hall (Am Econ Rev 86(1):54–70, 1996) production density model by distinguishing between the size of the industrial sector and the density of the urban economy in order to examine the effects of industry agglomeration and congestion on urban productivity. We also account for the endogeneity of industrial agglomeration and propose a simultaneous equation model to estimate the determinants of urban productivity and agglomeration. A spatial econometric analysis across 617 Chinese cities in year 2005 shows that the spatial concentration of industrial production is an important cause of higher productivity in large industrial cities and cities in neighboring regions, where higher productivity resulting from concentrated industrial production then leads to further agglomeration in these cities. Controlling for the size of the industrial sector, employment density has a negative effect on urban productivity. We conclude by briefly discussing potential policy implications of the empirical findings.     

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.     

Endogenous determination of historical amenities and the residential location choice

Brueckner et al. (Econ Rev 43:91–107, 1999) remark that city’s historical amenities, which are considered exogenous today, may have been formed endogenously over time. This paper develops a simple two-period model based on this idea. It assumes there are two locations in a city and two income types. Lot sizes are decided myopically in the first period and cannot be adjusted later. Without historical amenities, locations of the rich and the poor are never reversed (the poor always locate closer to the center) for increasing population, income and utility levels of each type. If the rich leave some “historical amenity” behind for the residents in the second period, locations are reversed when the population of the first period is moderate, income disparity between the two types is low and the rich is sensitive to amenity. An earlier version of this paper was presented at International Symposium on Spatial Economics and Transportation, Sendai, Japan, June 13, 2005. The paper has benefited greatly from the comments of Dr. Jan Brueckner, who participated in the symposium, and Dr. Charles de Bartolomé, my academic adviser in the University of Colorado at Boulder.     

Measuring self-sustainability of economic development at the county level

Factors that affect self-sustainability of regional economic development are defined and analyzed in this paper. Extensive empirical testing shows that at the county level, the size of the regional economy and agglomeration effects are less important than its regional multiplier and its export base. Because the classic export-base model fails specification tests when estimated at the county level, a modified export-base model accounting for spatial effects is developed and analyzed. To validate the proposed spatial export-base model, a practical procedure for estimating parameters of the model is also developed and utilized in an empirical study. The paper concludes with a brief review of the applicability of the modified export-base model to the analysis of the self-sustainability of regional economies, its limitations, and its policy implications. In particular, it is suggested that regional economic development policies should focus on promoting patterns of self-reinforcing regional growth rather than on maintaining unsustainable economic initiatives. It is also demonstrated that the size of a county's economy is not directly related to its self-sustainability and growth rates. Received: May 2000/Accepted: March 2002 Many thanks to Roger Stough and Alena Smirnova for their helpful comments. The research was supported in part by Grant CO-12884F from the Appalachian Regional Commission. An earlier version of the paper was presented at the 39th Annual Meeting of the Southern Regional Science Association in Miami Beach, FL, April 13–15, 2000.     

Spatial activity and labour market patterns: A connectivity analysis of commuting flows in Germany

The spatial activity patterns of firms in a multi-regional system are closely connected with the structure and evolution of regional labour markets. Based on an extensive data set (cross-section) on commuting flows in Germany, this paper aims to identify the relationship between entrepreneurial activity and spatial labour markets, by employing in particular the concept of ‘entrepreneurial city’. A network connectivity model is adopted to assess connectivity patterns, using the power-law and exponential law as a statistical test framework, in order to detect the presence of economic activity hubs that may resemble the concept of entrepreneurial cities. Various results are presented and interpreted in the final part of the paper.     

An empirical analytical framework for agglomeration economies

This paper proposes an empirical analytical framework for agglomeration economies based on a translog production-inverse input demand system. Estimation of the system allows us to identify effects on total factor productivity (TFP), partial factor productivity, factor prices and factor demands. It also provides a decomposition of the aggregate agglomeration elasticity into returns that arise from the increased efficiency of factor inputs and a “direct” agglomeration effect which exists over and above any factor augmentation. This enables us to indirectly address the problem of unobserved heterogeneity in factor “quality”. The paper provides an empirical application of the model using firm level data for UK manufacturing and service industries.     

Urbanization process and land use policy

Within a framework of NEG model, this paper intends to show that urbanization rate is determined as a synthetic result of rational behavior of each socio-economic agent. In particular, a model is constructed with bearing in mind to explain the urbanization process in China such that the role of government in managing land use is explicitly incorporated and policy effects can be evaluated. Some results of theoretical analysis and numerical simulation analysis are contrasted with the ones of Fujita-Krugman (Reg Sci Urban Econ 25: 505–528, 1995) incorporating land into a NEG model as well.     

The regional labor market adjustment process: Determinants of changes in rates of labor force participation,unemployment, and migration

This paper employs a simultaneous-equations model to examine the regional labor market adjustment process for a sample of United States counties over the 1960–1970 period. The interaction between employment change and migration is well known, but that between employment change and labor force participation has been largely neglected. Labor force participation response, especially among women, is shown to be an important endogenous element in the labor market adjustment process. Important asymmetries are also evident between growing and declining regions, and these asymmetries suggest that the well-established link between employment and migration may have more force in growing than in declining areas.This study was supported by a grant from the Economic Development Administration, U.S. Department of Commerce.