Sources for regional unemployment disparities in Germany: lagged adjustment processes, exogenous shocks or both?

Marcus Kunz
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Marcus Kunz: Universität Regensburg

No 200919, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "The paper analyses movements in the unemployment rate of West German districts in the period 1992-2004 by the chain reaction theory of unemployment (CRT). The estimations show that unemployment movements are generated together by lagged adjustment processes and by exogenous shocks. We find that adjustment processes to labour demand shocks are transient and do not display hysteresis effects. The effect of a labour demand shock to the unemployment rate disappears completely within only 2 years. Approximately half of the shock affects the unemployment rate in the contemporaneous period, the other half is due to temporal persistence in future periods, i.e. lagged adjustment effects. These results hold for low, middle and high unemployment regions and are in line with other studies in this field. The effects of exogenous national variables are much higher than those of exogenous regional variables during both, boom as well as recession years. The differentiation between low, middle and high unemployment regions shows that the development of regional factors would generate a regional convergence process, while national factors tend to impede this development." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Westdeutschland; Determinanten; Hysterese; Arbeitslosigkeitsentwicklung; Landkreis; Persistenz; regionale Disparität; Arbeitslosenquote; 1992-2004 (search for similar items in EconPapers)
JEL-codes: C22 C23 O18 R11 R12 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2009
New Economics Papers: this item is included in nep-geo
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:200919

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