Timo Mitze

Does Firm Size make a Difference? Analysing the Effectiveness of R&D Subsidies in East Germany

Abstract We analyse the impact of public subsidies on private sector research and development (R&D) activity for a sample of East German firms. Using propensity score matching, our empirical results indicate that subsidized firms indeed show a higher level of R&D intensity (R&D expenditures relative to total turnover) and a higher probability for patent application compared with non-subsidized firms. We find that, on average, the R&D intensity increases from 1.5% to 3.9%. The probability of patent application rises from 20% to 40%. These results closely match earlier empirical findings for East Germany. Given the fact that the East German innovation system is particularly driven by small- and medium-sized enterprises (SMEs), we draw special attention to the effectiveness of R&D subsidies for this latter subgroup. Here, no specific empirical evidence is available so far. Our findings indicate that policy effectiveness also holds for private R&D activity of SMEs, with the highest increase in terms of R&D intensity being estimated for microbusinesses with up to ten employees.

Scientific collaboration between `old' and `new' member states: Did joining the European Union make a difference?

Abstract This paper provides new insights on the effects of the enlargement of the European Union (EU) and European integration by investigating the issue of scientific collaboration within the new EU member states vis-à-vis the old EU member states. The question addressed is whether the EU membership following the two enlargement waves 2004 and 2007 has significantly increased the co-publication intensity of the new member states with other member countries. The empirical results based on data collected from the Web of Science database and Difference-in-Difference estimations point towards a conclusion that joining the EU indeed has had an additional positive impact on the co-publication intensity between the new and old member states and, in particular, within the new member states themselves. These results give tentative support for the successfulness of the EU’s science policies in achieving a common ‘internal market’ in research. We also find evidence for early anticipation effects of the consecutive EU accession.

Studiengebühren und das Wanderungsverhalten von Studienanfängern: Eine panel-ökonometrische Wirkungsanalyse

Abstract The question of costs and benefits related to the introduction of tuition fees still dominates the current discussion of higher education policy in Germany. In this contribution, we quantify the effect of tuition fees on state-to-state migration patterns among university freshmen in Germany using an empirical migration model for all 16 German states (Bundesl¨ander) in the period 1999 to 2010. Overall, our results reveal a negative effect of tuition fees on gross in-migration to feecharging states since their introduction in 2006. Although the absolute size of this spatial redistribution effect is moderate, by means of simulation exercises we nevertheless show that the potential use of tuition fees as a planning instrument for higher education policy may not be seen as negligibly. With regard to the questions, which of the other determinants in the migration model can affect gross in-migration flows in a similar way as the introduction of tuition fees was able to do, we find that only a very drastic improvement in the quality of teaching and research facilities at universities in non-charging states relative to fee-charging universities would be able to evoke a similar effect on the spatial redistribution of university freshmen among German states. This raises a closely related question, namely, which of the available instruments may serve best to accomplish the goal of high utilization rates for existing capacities at universities in East Germany as formulated in the University Pact 2020 (Hochschulpakt 2020).

Network Dependency in Migration Flows – A Space-time Analysis for Germany since Re-unification

The contribution of this paper is to analyse the role of network interdependencies in a dynamic panel data model for German internal migration flows since re-unification. So far, a capacious account of spatial patterns in German migration data is still missing in the empirical literature. In the context of this paper, network dependencies are associated with correlations of migration flows strictly attributable to proximate flows in geographic space. Using the neoclassical migration model, we start from its aspatial specification and show by means of residual testing that network dependency effects are highly present. We then construct spatial weighting matrices for our system of interregional flow data and apply spatial regression techniques to properly handle the underlying space-time interrelations. Besides spatial extensions to the Blundell-Bond (1998) system GMM estimator in form of the commonly known spatial lag and unconstrained spatial Durbin model, we also apply system GMM to spatially filtered variables. Finally, combining both approaches to a mixed spatial filteringregression specification shows a remarkably good performance in terms of capturing spatial dependence in our migration equation and at the same time qualify the model to pass essential IV diagnostic tests. The basic message for future research is that space-time dynamics is highly relevant for modelling German internal migration flows.

Ageing shocks and short-run regional labour market dynamics in a spatial panel VAR approach

ABSTRACT Using a flexible spatial panel VAR model for a small-scale labour market system, we investigate the dynamic interdependences between changes in the demographic structure and the labour market performance of a regional economy. With a particular focus on ageing shocks, we describe an increase in the share of elderly in regional population due to exogenous changes in the institutional context, such as pension reforms. The regional labour market implications of an ageing shock are then tested with regard to the effects on employment growth, unemployment and labour participation rate. Our results based on a sample of 71 Scandinavian regions point to negative regional labour market effects of an ageing shock implying a reduction in employment growth and a temporarily declining labour participation rate, while the unemployment rate increases. Importantly, spatial spillovers amplify these negative impacts through a marginalization of macro-regional labour markets. As a robustness check, we reverse the causal ordering and analyze the responses to a positive macroeconomic shock which initially increases employment growth. We find direct and spatially indirect adjustment patterns characterized by a reduction of the unemployment rate, an increase in the labour participation rate and a decrease in the share of elderly in the population.

IS THERE A CURSE OF RELOCATION? ANALYSING THE CAUSAL LINK BETWEEN OFFSHORING AND THE INNOVATION PERFORMANCE OF (SMALL) FIRMS

We analyse the empirical link between offshoring activities and different dimensions of innovation performance at the firm-level. In order to identify causal effects running from offshoring to innovation, we use a quasi-experimental comparison group approach by means of (conditional) difference-in-difference estimations applied to German establishment-level data for firms that conducted offshoring activities in the period 2007–13. We find that the international relocation of business functions has a negative impact on the firms’ propensity to be innovative in terms of product and process innovations as well as product improvements. While for larger firms the reduction in process innovations is most striking, potentially due to a lack of resources, stagnation in expertise and a reduction in intra-organizational learning-by-doing associated with the relocation of some business activities, for small and medium-sized enterprises we particularly observe a reduction in product innovations after the offshoring activity has taken place. When interpreting this ‘pessimistic’ picture on the link between offshoring and the innovation performance of firms, the reader should note that our findings for German establishments have to be assessed through the lens of a global economy in economic recession after 2008, which may have intensified the negative impact of offshoring on the firms’ innovation performance.

Does regional science need an experimentalist buzz

The purpose of this article is to stimulate the discussion about the constant influx of new and potentially useful methods for empirical investigations in regional science and policy analysis. Particularly, the focus here lies on a brief presentation of ‘quasi’-experimentalist methods as a promising approach to derive causal statements with respect to the effectiveness of regional policy instruments. Outlining potential advantages and pitfalls of this approach by means of an illustrative empirical example, this article finally sets up a research agenda for its future use by regional scientists and economic geographers.

The Effect of Tuition Fees on Student Enrollment and Location Choice – Interregional Migration, Border Effects and Gender Differences

This paper investigates the effects of tuition fees on the university enrollment and location decision of high school graduates in Germany. After a Federal Constitutional Court decision in 2005, 7 out of 16 German federal states introduced tuition fees for higher education. In the empirical analysis, we use the variation over time and across regions in this institutional change in order to isolate the causal effect of tuition fees on student enrollment and migration. Controlling for a range of regional- and university-specific effects, our results from Difference-in-Differences estimations show that there is generally no effect of tuition fees on internal enrollment rates. However, we find a redirecting effect on first-year students‘ migratory behavior as indicated by a signicant drop in the gross in-migration rates in fee-charging states. Further, our results point at a stronger migration response of male students, which, however, can mainly be attributed to a “border effect”. That is, interregional migration flows of male students are redirected from fee-charging universities to those universities that are geographically close by while being located in a non-charging neighboring state. Controlling for these border effects, the relocating trend in long-distance migration of university freshmen does not show any particular gender differences.

Going offshore or better staying in? Spatial relocation strategies and their impact on firm innovativeness

ABSTRACT We analyse the short- to mid-run effects of spatial relocation strategies on firm innovativeness and productivity growth. Using conditional difference-in-difference estimation with multiple treatments, we find for a sample of German firms in 1999–2013 that offshoring has a statistically significant negative impact on the firms’ innovation activity and productivity growth vis-à-vis nonrelocating comparison firms. In contrast, we find a positive link between domestic relocation activities and the firms’ propensity to introduce a product innovation. Firms should thus carefully account for potentially distorting performance effects when deciding about the spatial scale of relocation strategies in the short to mid-run.

Simultaneous-equations Analysis in Regional Science and Economic Geography

This paper provides an overview over simultaneous equation models (SEM) in the context of analyses based on regional data. We describe various modelling approaches and highlight close link of SEMs to theory and also comment on the advantages and disadvantages of SEMs.We present selected empirical works using simultaneous-equations analysis in regional science and economic geography in or-der to show the wide scope for applications. We thereby classify the empirical contributions as either being structural model presentations or vector autoregressive (VAR) models. Finally, we provide the reader with some details on how the various models can be estimated with available software packages such as STATA, LIMDEP or Gauss.