What drives Skill-Biased Regional Employment Growth in West Germany?

NIW Diskussionspapier Nr.2

Cordes Alexander

Hannover, Mai 2008

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There is a large literature dealing with total or high-skilled employment growth at the local level but analyses for different qualification levels are rare. Using an econometric analogon to the shift-share technique, we investigate to what extent determinants of employment growth at the local level (NUTS 3 regions) discriminate between five different levels of qualification, making use of differentiated data from the employment statistics of western Germany from 2000 to 2006. While the local industry mix affects the qualification levels differently, we find non-discriminating effects of the firm size structure or increasing sectoral concentration in manufacturing. Evidence for functional (qualification related) specialisation between central and peripheral regions is identified, too. Moreover, high dispersion of region-specific fixed effects in respect of high-skilled occupations emphasises the role of regional particularities like amenities or policy measures for these groups. Negative effects of occupations with the highest academic education requirements are discussed and possible explanations considered such as the composition of the concerned occupation classes or latent business cycle dynamics. Finally, in the light of possible North-South and urban-rural divides, the distribution of growth components is investigated.

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