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Regional convergence at the county level: The role of commuters

Melanie Krause () and Sebastian Kripfganz

No 2201, Discussion Papers from University of Exeter, Department of Economics

Abstract: The growth trajectory of a region is known to be influenced by the economic circumstances of other regions in its proximity. While proximity is often understood in a geographic sense, we consider commuting as a channel for cross-regional economic dependencies. Commuters, who spend a substantial portion of their income in a different place from where they earn it, connect peripheral regions to economic centers. In contrast to geographic measures, commuter flows are inherently asymmetric and heterogeneous, as are the economic dependencies among regions. We estimate a time-space dynamic panel model with German county-level data, and demonstrate a considerable variation in the distribution of shock responses which is hidden by the traditional focus on average marginal effects. In counterfactual experiments, the local spatial multipliers differ substantially depending on the nature of the shock or policy intervention and the assumed network structure, with implications for the growth convergence process.

Keywords: regional convergence; commuting; spatial weight matrix; shock propagation; time-space dynamic panel data model (search for similar items in EconPapers)
JEL-codes: C23 J61 O18 R12 (search for similar items in EconPapers)
Date: 2022-01-05
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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