Jens Suedekum

Why are Educated and Risk-Loving Persons More Mobile Across Regions?

Why are better educated and more risk-friendly persons more mobile across regions? To answer this question, we use micro data on internal migrants from the German Socio-Economic Panel (SOEP) 2000-2006 and merge this information with a unique proxy for region-pair-specific cultural distances across German regions constructed from historical local dialect patterns. Our findings indicate that risk-loving and skilled people are more mobile over longer distances because they are more willing to cross cultural boundaries and move to regions that are culturally different from their homes. Other types of distance-related migration costs cannot explain the lower distance sensitivity of educated and risk-loving individuals.

Subsidizing Education in the Economic Periphery: Another Pitfall of Regional Policies?

One of the most prominent instruments of regional policy is to foster education and human capital formation in economically lagging regions. However, regional policy of this type can actually hurt instead of help the poor areas. The reason is that individual geographical mobility increases with the personal skill level. Through education subsidies, particularly if targeted on relatively high skilled workers, individuals can cross some threshold level of qualification beyond which emigration accrues. Regional policies then result in a human capital flight harmful to individuals remaining in the economic periphery. This fatal result does not hold for such policies that foster basic education and focus on the relatively low skilled.

Cultural Diversity and Local Labour Markets

Suedekum J., Wolf K. and Blien U. Cultural diversity and local labour markets, Regional Studies. The diversity of nationalities of foreign workers in the German labour market has increased considerably over the period 1995–2006. This paper investigates the effects of this diversity for native employees at the local level. The higher is high-skilled foreign employment, the higher are local wages and employment levels for natives. These effects are reinforced the more diverse is the group of high-skilled foreigners. For low-skilled foreigners benefits from diversity are also found, but only conditional on the overall size of this group. These results suggest that cultural diversity benefits native workers by raising local productivity.

AGGLOMERATION AND REGIONAL COSTS OF LIVING

Standard models of the new economic geography predict that costs of living are lower in the core than in the periphery. But in reality they tend to be higher in agglomeration areas, mainly because of regional differences in housing costs. In this paper, we add a home goods sector to the seminal NEG model of Krugman (1991). We show that a core-periphery structure can endogenously emerge in which the core is the more expensive area. This result has an important normative implication. Since higher costs of living imply falling real wages if there is no nominal wage premium, it is not desirable for everybody to live in the core region. Copyright Blackwell Publishing, Inc. 2006

Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations

In this paper, a survey is presented of the recent developments in two empirical literatures at the crossroads of labour and urban economics: studies about localised human capital externalities (HCE) and about the urban wage premium (UWP). After surveying the methods and main results of each of these two literatures separately, several interrelations between them are highlighted. In particular, the discussion focuses on whether HCE can be interpreted as one fundamental cause of the UWP and whether one literature can learn conceptually from the other.

Concentration and Specialisation Trends in Germany Since Reunification

In this paper we describe the development of regional specialisation and geographical concentration in Germany between 1993 and 2001. Somewhat contrary to theoretical expectations derived from the recent literature in location theory, we neither find compelling evidence for a specialisation process of German regions, nor for a concentration process of industries. By and large and with some exceptions, this conclusion holds both for West Germany and Germany as a whole, as well as for all levels of territorial aggregation (NUTS1-NUTS3). Urban areas are stronger specialised than rural districts, but also subject to faster de-specialisation. Those regions, which have increased regional specialisation against the trend, have performed significantly better in terms of employment growth.

Severance Payments and Firm-specific Human Capital

What effect does employment protection through severance payments have on the behaviour of employed workers? We analyse this issue within a stochastic two-period framework where workers decide on human capital investments and find two competing effects: severance payments imply higher job security that fosters human capital formation. At the same time, a lay-off is perceived by the workers to be a weaker penalty if severance payments are provided. This incentive lowers their optimal amount of firm-specific investments. Which effect prevails on balance depends on the distribution of investment returns among firm and workers. For strong positive reactions, employment protection is also in the interests of the firm. Copyright Fondazione Giacomo Brodolini and Blackwell Publishing Ltd 2003.

Human Capital Externalities and Growth of High- and Low-Skilled Jobs

Summary Human capital is unequally distributed across cities or regions within a country. The way how the spatial distribution of human capital evolves over time sheds light on the strength of concentration forces for high-skilled workers, such as localised increasing returns to human capital. In this paper I analyse the impact of human capital on local employment growth for Western German regions (1977-2006). Two main empirical facts are established: “Skilled cities” in Western Germany grow faster. At the same time there is convergence of human capital shares across cities, i.e., high-skilled workers do not increasingly concentrate in space. Whereas the first fact (the “smart city hypothesis”) similarly holds in Germany and in the US, there is a striking difference when it comes to the second fact. Some researchers have found an opposite trend of human capital divergence across US metropolitan areas. My findings suggest that human capital exhibits a different spatial trend in different countries. I present a theoretical model which shows that the spatial convergence trend does not imply that concentration forces for high-skilled workers are absent in Western Germany, but only that they are relatively weak compared to countervailing dispersion forces. I further discuss some reasons that may explain the differences between Western Germany and the US. I emphasise the role of the tax system and the impact of pro-dispersive regional policy in Europe.

Vertical Industry Relations, Spillovers, and Productivity: Evidence from Chilean Plants

We use disaggregated data on Chilean plants, and the Chilean input-output table to examine the impact of agglomeration spillovers on total factor productivity (TFP). In common with previous studies, we find evidence of intra-industry spillovers, but no evidence of cross-industry spillovers in general. This picture changes, however, when we take vertical industry relations into account. We find important productivity spillover effects from plants in upstream industries. Interestingly, a similar effect cannot be found from plants in downstream industries. The number of plants in these sectors has no effect on firm level TFP, just as the number of plants in other industries that are neither important upstream suppliers nor downstream customers also has no effect. Agglomeration effects are stronger for small than for large plants.

Selective migration, union wage setting and unemployment disparities in West Germany

There are wide and persistent disparities between regional unemployment rates in West Germany. Furthermore, regions with high unemployment tend to have relatively low effective wages and vice versa. Internal migration is driven by these spatial disparities. However, mobility will not work as an adjustment mechanism, but rather perpetuate regional imbalances if there is a skill bias within the group of internal migrants. Correspondence Address: Jens Suedekum, University of Konstanz, Fach D132, 78457 Konstanz, Germany. Email: jens.suedekum@uni‐konstanz.de JEL Classification: J6, R11