Patuelli, Roberto ;
Schanne, Norbert ;
Griffith, Daniel A. ;
Nijkamp, Peter
(2011)
Persistence of Regional Unemployment: Application of a Spatial Filtering Approach to Local Labour Markets in Germany.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 38.
DOI
10.6092/unibo/amsacta/4497.
In: Quaderni - Working Paper DSE
(743).
ISSN 2282-6483.
Full text available as:
Abstract
The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the ‘home market’) that is usually incorporated in the fixed effects parameters. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes.
We present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive parameters estimated for unemployment data for German NUTS-3 regions. We find widely heterogeneous but generally high persistence in regional unemployment rates.
Abstract
The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the ‘home market’) that is usually incorporated in the fixed effects parameters. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes.
We present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive parameters estimated for unemployment data for German NUTS-3 regions. We find widely heterogeneous but generally high persistence in regional unemployment rates.
Document type
Monograph
(Working Paper)
Creators
Keywords
unemployment persistence, dynamic panel, hysteresis, spatial filtering, fixed effects
Subjects
ISSN
2282-6483
DOI
Deposit date
28 Jan 2016 13:18
Last modified
28 Jan 2016 13:18
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Keywords
unemployment persistence, dynamic panel, hysteresis, spatial filtering, fixed effects
Subjects
ISSN
2282-6483
DOI
Deposit date
28 Jan 2016 13:18
Last modified
28 Jan 2016 13:18
URI
Downloads
Downloads
Staff only: