Threshold for employment and unemployment. A spatial analysis of German RLM's 1992-2000
Christian Dreger, Reinhold Kosfeld
External Publications,
2006
Abstract
Changes in production and employment are closely related over the course of the business cycle. However, as exemplified by the laws of Verdoorn (1949, 1993) and Okun (1962, 1970), thresholds seem to be present in the relationship. Due to capacity reserves of the firms, output growth must exceed certain levels for the creation of new jobs or a fall in the unemployment rate. While Verdoorn's law focuses on the growth rate of output sufficient for an increase in employment, in Okun's law, the fall in the unemployment rate becomes the focus of attention. In order to assess the future development of employment and unemployment, these thresholds have to be taken into account. They serve as important guidelines for policymakers. In contrast to previous studies, we present joint estimates for both the employment and unemployment threshold. Due to demographic patterns and institutional settings on the labour market, the two thresholds can differ, implying that minimum output growth needed for a rise in employment may not be sufficient for a simultaneous drop in the unemployment rate. Second, regional information is considered to a large extent. In particular, the analysis is carried out using a sample of 180 German regional labour markets, see Eckey (2001). Since the cross-sections are separated by the flows of job commuters, they correspond to travel-to-work areas. Labour mobility is high within a market, but low among the entities. As the sectoral decomposition of economic activities varies across the regions, the thresholds are founded on a heterogeneous experience, leading to more reliable estimates.The contribution to the literature is twofold. First, to the best of our knowledge, no previous paper has investigated a similar broad regional dataset for the German economy as a whole before. By using a panel dataset, information on the regional distributions around the regression lines as well as theirs positional changes is provided for each year. Second, the methods applied are of new type. They involve a mixture of pooled and spatial econometric techniques. Dependencies across the regions may result from common or idiosyncratic (region specific) shocks. In particular, the eigenfunction decomposition approach suggested by Griffith (1996, 2000) is used to identify spatial and non-spatial components in regression analysis. As the spatial pattern may vary over time, inference is conducted on the base of a spatial SUR model. Due to this setting, efficient estimates of the thresholds are obtained. With the aid of a geographic information system (GIS) variation of the spatial components can be made transparent. With Verdoorn’s and Okun’s law the figures show some significant patterns become obvious over time. In respect to Verdoorn’s law, for instance, a stripe of high values in the north-western part from Schleswig-Holstein via Lower Saxony and North Rhine Westfalia to Rhineland Palatinate is striking in all years but 1994 and 1995. In most periods the spatial component is likewise concentrated in Saxony. Clusters of low values can be found in northern Bavaria and, in some periods, in Thüringen and Mecklenburg-Vorpommern. Other parts of Germany appear to be more fragmented consisting of relative small clusters of low, medium and high values of the spatial component. With Okun’s law some changing spatial patterns arise. In all, spatially filtering provides valuable insights into the spatial dimensions of the laws of Verdoorn and Okun.
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Industry Level Technology Gaps and Complementary Knowledge Stocks as Determinants of Intra-MNC Knowledge Flows
Björn Jindra, Johannes Stephan
East-West Journal of Economics and Business,
1 & 2
2005
Abstract
Pursuing a subsidiary level analysis, we this paper tests the ‘technology gap’ hypothesis in the context of intra-MNC knowledge flows. Furthermore, it introduces complementary knowledge stocks into the concept of absorptive capacity. A set of hypotheses is tested in sample 434 foreign subsidiaries based in Central and East Europe. We find partial support for the ‘technology gap’ hypothesis applied at industry level. Furthermore, subsidiaries’ complementary knowledge stocks increase the probability for corresponding knowledge inflows from the foreign parent.
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A strategy view on knowledge in the MNE – Integrating Subsidiary Roles and Knowledge Flows
Björn Jindra
East-West Journal of Economics and Business,
1 & 2
2005
Abstract
We assume knowledge inflows endogenous to subsidiary roles. Integrating organisational and knowledge-based views we propose a new subsidiary typology based on MNE integration-subsidiary capability. We hypothesise that both dimensions are positively associated with knowledge inflows into the focal subsidiary. This prediction is tested with data for 425 subsidiaries. The key findings were: (a) the extent for knowledge inflows differs significantly across all subsidiary roles; (c) it diminishes in a anti-clockwise direction starting in the high integration-high capability quadrant of the IC taxonomy; thus (b) both MNE integration and subsidiary capability drive knowledge inflows, although, the balance shifts more towards integration.
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A Strategy View on Knowledge in the MNE - Integrating Subsidiary Roles and Knowledge Flows
Björn Jindra
East-West Journal of Economics and Business,
1 & 2
2005
Abstract
We assume knowledge inflows endogenous to subsidiary roles. Integrating organisational and knowledge-based views we propose a new subsidiary typology based on MNE integration-subsidiary capability. We hypothesise that both dimensions are positively associated with knowledge inflows into the focal subsidiary. This prediction is tested with data for 425 subsidiaries. The key findings were: (a) the extent for knowledge inflows differs significantly across all subsidiary roles; (c) it diminishes in a anti-clockwise direction starting in the high integration-high capability quadrant of the IC taxonomy; thus (b) both MNE integration and subsidiary capability drive knowledge inflows, although, the balance shifts more towards integration.
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Innovative Milieux: Advanced Posts of Interpenetration between the Economic System and the Science System
Peter Franz
IWH Discussion Papers,
No. 71,
1998
Abstract
A growing number of governments, political parties, and enterprises set the theme „innovation“ on their agenda and join in the global race to more competitive national economies. In this race the concept of the „innovative milieu“ serves as an important point of orientation and as a political target that, on the first glance, seems to be transferable in concrete political measures. A basic feature of innovative milieux is the quick and easy transfer of knowledge to products in demand. This speed-up in the diffusion of knowledge is not only interesting with respect to the economic advantages but also with respect to science. It is the basic thesis of this paper that innovative milieux represent special cases where the economic system and the science system interpenetrate in an extreme way. Empirical findings show that the actors of innovative milieux have a strong cultural proximity to basic attitudes and behavior within the science system. This relates to the institutionalization of trial and error, the reinforcement of exploratory behavior, the flow of information, and to a special mixture of cooperation and competition. An essential feature of innovative milieux derives from the network relations of its actors. These relations have to be balanced a) to the need to create trust and reduce uncertainty, and b) to the need to stay permeable enough for linkages with new actors from outside. With regard to time innovative milieux have to be conceived from an evolutionary perspective. This involves several steps: Development of prerequisites, consolidation, attraction of labor and enterprises from other regions. From the evolutionary perspective, too, possible factors of preventing or accelerating the „entropic death“ (Camagni 1991) of innovative milieux can be discussed. The exceptional character of innovative milieux has consequences for innovation-oriented political strategies. The self-enforcing dynamics of innovative milieux create a tendency to more economic inequality between regions (core-periphery differences). This is contradictory to political strategies in which innovation-oriented policy is applied to reach an offset between prospering and impoverished regions. In many cases a strategy starting from the assumption of an enduring non-innovative milieu seems to be more realistic and more promising. Further on, the new more direct links between enterprises and research institutes question the current shape of technology transfer institutions. Finally the potential effects of the new trend to encourage the entrepreneurship of research staff on the science system are discussed.
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