A labor market based theory of regional economic development

The Borts and Stein (1964) theory of regional economic growth and development has been widely accepted and discussed in regional economic development literature. Given their assumption that labor demand conditions are invariant between regions and that the labor demand is highly wage elastic, they conclude that regional growth is primarily supply driven and differences in growth among regions arise due to differences in the growth of labor supply assuming that wage elasticity of labor supply is the same across regions. Muth (1968, 1971) claims to have verified the Borts and Steins (BS) conclusion. We propose a regional labor market based model of economic development similar to BS with certain modifications in assumptions and show that the Borts-Stein-Muth (BSM) conclusion is based upon a narrow view of labor demand and supply elasticities. Our theory demonstrates that regional development is mainly labor demand driven once we adopt a broader view of elasticities. The broader view incorporates the direct effect of wages on labor supply and labor demand as well as the indirect effects of wages through changes in inmigration and firms' formations in a region. Received: March 1998/Accepted: August 1998     

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     

Center-down development in perspective: Labor absorption and interdependence in Brazilian regional industries

ABSTRACT This paper investigates the effect of a center-down pattern of regional development on industrial labor absorption. Sectoral labor reallocation is analyzed in two less developed regions of Brazil with contrasting levels of development and linkage to the most developed region. Labor absorption performances are related to factor use characteristics and the mix of capital and labor intensive industries in each region. An empirical model is tested to determine the degree of interdependence between labor intensive industries in each region and its relation to labor absorption.     

Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model

Private investment subsidies are a key instrument for regional policy making to foster the economic development in lagging regions. In this paper, we analyze their effect on labor productivity growth for German labor market regions for the period from 1994 to 2006. A spatially augmented multiplicative interaction model based on neoclassical growth theory is used, which allows us to assess the marginal effect of regional policy proxied by overall payments of the main German regional development program on the region’s convergence speed conditional on its initial income position as well as policy-related spillovers from its spatial neighborhood. Our results show a statistically significant positive effect of regional policy on labor productivity growth, which increases, the further away the supported region is from its steady-state income level, and the more grants are provided to its geographical neighborhood. The latter effect highlights the existence of positive spatial spillover effects from regional policy in Germany, which enhance the attractiveness of the whole macro region for private sector investments. The additional growth stimulus provided by a 1 % increase in the region’s funding volume is thereby related to an up to 0.3 % gain in terms of labor productivity growth. For regions with the highest initial gaps to steady-state income in the sample distribution, the regional policy stimulus accounts for almost 8 % of the regions’ productivity growth performance.     

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.     

区域发展不均衡与劳动力流动研究

通过对区域发展不平衡的背景原因进行分析,基于地区间部分省份劳动力流入、流出现状的研究,得出了区域基础条件、收入水平是导致劳动力流动的主要原因。     

我国城乡发展的“刘易斯转折点”辨析及延伸探讨——基于湖北省村镇调研的城乡二元关系研究

日益严峻的"民工荒"现象引发了我国是否已出现所谓"刘易斯转折点"的讨论。刘易斯二元经济模型将"城市—乡村"的发展看成一个交互的连续过程,而我国独特的城乡二元体制和显著的区域差异则导致了该理论分析上的诸多困惑。文章在厘清刘易斯模型的各种预设条件及其与中国现实差异的基础上,对相关研究进行归纳和述评;然后以湖北省村镇调研为例,从城镇化的微观机制视角检验相关研究的主要观点及政策建议。最后,文章试图为中国特色的"二元关系转折点"现象提供解释框架,并基于微观机制研究的启示而讨论其政策含义。     

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 investment incentives in Germany: Impacts on factor demand and growth

The aim of this paper is to analyse the effects of regional investment incentives – a main component of regional policy in West Germany – on regional factor demand (investment and labor), growth and convergence of per capita income for the period 1978 to 1989. Demand for investment and labor arise from a model of cost minimization at given output with a putty-clay production function. The production function allows for regional technical efficiency. To model the output effect on factor demand an auxiliary output function is specified. In estimating the functions attention is given to the short-run dynamics and the long-run behaviour of factor demand by error-correction models. The empirical long-run relationships are then used to simulate the effects of regional investment incentives. In contrast to most studies for other countries the empirical results provide evidence that regional policy in Germany induces not only additional investment but also creates positive employment effects. However, the effects of regional investment incentives on growth and convergence of labor productivity are negligible. Received: October 1996/Accepted: May 1999     

The design and implementation of a regional economic-demographic simulation model

Managing urban growth patterns is essential for an economic and demographic development process which maximizes public and private investments in the urban environment. This paper presents the results of a modelling design effort to link a hybrid regional input-output model to demographic, labor force and energy models for use in planning in the San Francisco Bay Region. Extensive use of system feedback is a major component of this research effort. Summary results of the model outputs are presented in this paper.     

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.     

Foreign labor and regional labor markets: aggregate and disaggregate impact on growth and wages in Danish regions

Foreign labor has become a central issue in Western Europe. This paper tests whether (1) inflows of foreign labor affect regional growth, and thereby whether employment opportunities for Danish workers are affected; (2) inflows of foreign labor lower real wage growth. We find that foreign labor has non-negative effects on the job opportunities for Danish workers in regional labor markets, whereas the evidence of a regional wage growth effect is mixed. We also present disaggregated results focusing on regional heterogeneity of business structures, skill levels and backgrounds of foreign labor. The results are interpreted within a specific Danish labor market context and the associated regional outcomes. This adds to previous findings and emphasizes the importance of labor market institutions for the effect of foreign labor on regional employment growth.     

城乡融合对小城镇区域专业化分工的影响——以浙江省为例

小城镇作为城乡交互的重要节点,在我国区域经济社会发展中一直具有非常特殊的地位和作用。"十四五"期间,城乡融合发展的体制机制建设将大力促进城乡要素的自由流动与重组配置,小城镇也将面临能否由"区域分异"走向"区域分工"的战略抉择。以浙江省为例,在剖析当前省域小城镇社会空间极化、职能类型分化特征的基础上,分析城乡融合发展战略对浙江省小城镇区域专业化分工所产生的影响,并从不同区域、不同类型视角提出针对性的战略指引与政策供给,为"十四五"时期浙江省小城镇的特色协同发展提供路径思考,同时也为全国其他省份提供参考和借鉴。     

THE USE OF INPUT-OUTPUT FABLES IN SPECIEYING INTERINDUSTRY AND INTERREGIONAL LABOR MARKET LINKAGES

ABSTRACT This paper presents the results of employing input-output relationships in the construction of a regional labor market, vector autoregression. forecasting model. Information available in published input-output tables is used to specify interindustry and interregional labor market linkages. It is shown that when the interrelationships indicated by the input-output tables are taken into account, the forecast accuracy of the model improves.     

Sources of regional variation in youth employment

This paper uses state data for the late 1970's in a regression model to assess the relative importance of several hypotheses that have been advanced to explain the significant relative deterioration in youth employment opportunities. The paper also attempts to evaluate the nature and importance of regional differences with respect to the variables that are associated with youth employment opportunities. In particular the paper focuses on the effects of minimum wages and efforts to alter wages by unions, the expanded youth population and the changing labor force participation of females, differences in labor market tightness, expenditures on job training, schooling decisions on the part of young people and the general influence of poverty. Drawing on the empirical evidence, the authors conclude that a policy of regional minimum wages might result in a ten to twenty percent expansion in youth employment and achieving full employment for adult males might have an approximately equal effect.     

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.     

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.     

The dynamics of spatial labor mobility in the Netherlands

"This paper discusses several factors that may explain [the] dynamic properties of internal labor migration. [The authors] focus especially on the influence of labor market and housing conditions on the mobility of people. A two-stage, generation-allocation model is proposed to investigate the role of different factors in the explanation of aggregate interregional migration flows. This model is applied to recent data on interprovincial labor migration in the Netherlands. The results indicate that housing supply seems to be an important determinant of temporal developments of spatial mobility, and that also the conditions on national and regional labor markets are associated with specific properties of recent migration patterns."     

Regional economic convergence: Do policy instruments make a difference?

The relationship between public capital, regional output and private sector productivity has been an issue of considerable interest in the regional development literature. There have however been few studies that develop linkages between these issues and the broader literature on economic convergence. This paper presents an innovative methodology to examine the process of regional economic convergence across U.S. states. We examine the effects of economic variables such as human and public capital in the convergence process, and control for business cycle and region specific effects in the analysis. Further, specification problems arising from spatial dependence are also addressed. Results from the empirical analysis show that the speed of convergence is influenced by region specific characteristics and the availability of trained labor in neighboring regions. Received: November 1998/Accepted: March 2000