By Thiess Büttner
By technique of theoretical and empirical research agglomeration economies as localized returns to scale are confirmed because the uncomplicated resource of monetary disparity. The significant implication for the exertions marketplace is the ensuing direction dependency of the spatial employment trend. As an empirical research of migration inside Germany records powerful local segmentation within the brief run, neighborhood salary formation is of specific value for the adjustment procedure in accordance with adjustments of the spatial employment trend. despite the fact that, a theoretical dialogue indicates that during the German environment with centralized salary bargaining neighborhood wages has a tendency to be rigid. This view is supported by way of an empirical research of the spatial salary constitution in Germany utilizing district data.
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Extra resources for Agglomeration, Growth, and Adjustment: A Theoretical and Empirical Study of Regional Labor Markets in Germany
However , if /3 < 1 the dynamic exte rnality at least shows up in the transito ry dyna mics. As the dynamic externality follows from the innovation acti vity of the firms with in a sect or , th e model deals with a dynami c analogue to Isard's localizati on economies, Recently, Audr etsch I Feldman (1996) presented clear 36 For a recent review, see Gr ossman / Helprnan ( 1994). t he derivation of steady-state growth rat es, see Feenstra (1996) and Grossma n / Helpman (1991). 38See Eng lrna nn / \Valz (1995) and \Valz ( 1996).
P a treatment for an int err egional equilibrium is given by Krugm an (1991c). Economies arising from the het erogen eit y in the labor market arising from skill, mentioned by Mar shall (1927) alr ead y, can be seen as a variation to th e variety of goods. More recent articles are Kim (1987) and Helsley / Strange (1990), which anal yze th e effect of th e size of th e labor market on producti vity with specialized labor demand in a syst em of citi es. The evolut ion of differenti at ed products in th e monopolisti c competition model is also an example of agglomeration economies arising from imperfect comp etition.
In view of th e dat aset und erlying t he empirica l analysis only some hypotheses can be test ed. But , for the general implications under consideration thi s deficiency is not cruc ial. 42 Employm ent in an Interr egional Equilibrium Thi s section propo ses two ways to assess th e empirical content and relevance of the agglomerat ion economies. One refers to th e observed spatial pattern of employment , th e oth er to th e evolution of thi s pattern over time. Fir st , th e implication s for th e observed employment patt ern are adressed.