nach oben

Review of Regional Research

Erschienen in:

06.04.2016 | ORIGINAL PAPER

Unemployment decline in East Germany: the role of demography

verfasst von: Michaela Fuchs

Erschienen in: Review of Regional Research | Ausgabe 2/2016

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This paper deals with the relation between population aging and the decline of unemployment in East Germany. For the analysis I adapt a direct and an indirect approach covering the years from 1996 to 2014. The direct approach quantifies the extent to which changes in the unemployment rate can be attributed to changes in the composition of the labor force. It includes a decomposition of the East German unemployment rate into changes in the workforce’s age structure, labor market participation, and age-specific unemployment rates. The indirect approach centers on the effects of changing cohort sizes on the unemployment rate and involves spatial panel regressions on the small-scale regional level. Results of the direct approach show that changes in the age structure of the workforce exert only a minor impact on the unemployment rate, whereas results of the indirect approach attest aging a significant impact on unemployment. Evidently, demographic change seems to affect unemployment primarily through a general increase of competition for labor that is further fostered by feedback effects between regions than through a direct change of the age structure. I conclude that the declining unemployment rate in East Germany is indeed affected by aging as evidenced by a declining youth share and an increasing old-age share. This indicates that a reversed cohort crowding effect has taken place.

Vorheriger Artikel Knowledge, innovation, agglomeration and regional convergence in the EU: motivating place-based regional intervention

Nächster Artikel Regional industrial diversification: evidence from German gross value added

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

In general, the impact of demographic change on labor market outcomes can be analyzed in various ways. Fertig et al. 2009, for example, investigate whether and to what extent demographic change has an impact on human capital accumulation in Germany. Michaelis and Debus 2011 develop a general equilibrium model of a unionized economy to analyze the equilibrium effects of workforce aging on the labor market in Germany. Likewise, Lisenkova et al. 2013 use a dynamic overlapping generations computable equilibrium model to examine the impact of population aging on the Scottish labor market.

See https://www.destatis.de/EN/Meta/abisz/Mikrozensus_e.html for further details. Information from the Zensus 2011 is included from 2011 onwards.

The definition of unemployment varies slightly between the survey data from the Microcensus and the official data from the Federal Employment Agency (see Kruppe et al. 2008 for further details). The differences with respect to the purposes followed here are very small, however.

The strong decrease in the number of births took a larger share in these developments than the net migration flows to West Germany (see Fuchs et al. 2014, pp. 12).

The comparison with West Germany shows that in almost all age groups, the LFPR were higher in East Germany in 1996. These differences almost disappeared until 2014, however (see Table 7 in the Appendix and Schnabel 2016).

They also become visible on the aggregated level. Figure A.1 in the Appendix further contrasts the development in East Germany with that in West Germany, again highlighting the fundamental differences between the two regions.

Klinger and Rothe 2012 confirm the large impact of the labor market effect by showing that the labor market reforms have supported the decline of long-term unemployment in Germany.

These results also hold when omitting Berlin from East Germany.

Because the focus is on the cohort crowding hypothesis only, no additional explanatory variables are included in the regression. Further explanations for changes in the unemployment rate that are not considered here might be provided by changes in labor demand, in wages and wage setting processes, in structural and technological change or in labor market institutions and labor market policy.

Because the youth share and the old-age share refer to the same population, the two measures are highly correlated. The correlation coefficient reaches - 0.836 for the whole observation period. As a result, the inclusion of both variables in one regression would lead to multicollinearity and to biased coefficient estimates.

The use of the random effects panel estimator yields similar results with respect to significance and sign. Results are available from the author upon request.

Although Shimer 2001 and Biagi and Lucifora 2008 find no significant differences between the results generated by OLS and instrumental variables estimators, I conduct a simple test on endogeneity. The temporal dimension of the instruments is thereby determined by data availability. In the case considered here, appropriate data for East Germany does not exist before 1991, because regional delineations and information for the German Democratic Republic cannot be made consistent with the present-day NUTS-3-demarcations. As a consequence, it is not possible to construct instrumental variables lagged more than 5 years as done by Shimer 2001, Nordström-Skans 2005 and Garloff et al. 2013, for example.

For example, spatial correlation can originate from migration flows between rural regions and cities.

A Chow test on structural change in 2005 rejects the null hypothesis of equal slope and intercept of the two groups.

Alecke B, Mitze T, Untiedt G (2010) Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR. Jahrb Reg wiss 30(2):159–189

Anselin L (1988) Spatial Econometrics: methods and models. Kluwer Academic Publishers, Dordrecht

Anselin L, Bera A, Florax R, Yoon M (1996) Simple diagnostic tests for spatial dependence. Reg Sci Urban Econ 26(1):77–104

Belotti F, Hughes G, Mortari AP (2013) Xsmle: Stata module for spatial panel data models estimation. http://ideas.repec.org/c/boc/bocode/s457610.html

Biagi F, Lucifora C (2008) Demographic and education effects on unemployment in Europe. Labour Econ 15(5):1076–1101

Cliff A, Ord J (1981) Spatial processes: models and applications. Pion Limited, London

Debarsy N, Ertur C (2010) Testing for spatial autocorrelation in a fixed effects panel data model. Reg Sci Urban Econ 40(6):453–470

Easterlin RA (1961) The American baby boom in historical perspective. Am Econ Rev 51(5):869–911

Elhorst JP (2003) Specification and estimation of spatial panel data models. Int Regional Sci Rev 26(3):244–268

Fallick B, Fleischman C, Pingle J (2010) The effect of population aging on the aggregate labor market. In: Abraham KG, Spletzer JR, Harper M (eds) Labor in the new economy. University of Chicago Press, Chicago, pp 377–417

Fertig M, Schmidt CM, Sinning MG (2009) The impact of demographic change on human capital accumulation. Labour Econ 16(6):659–668

Flaim PO (1979) The effect of demographic changes on the nation’s unemployment rate. Mon Labor Rev 102(3):13–23

Flaim PO (1990) Population changes, the baby boom and the unemployment rate. Mon Labor Rev 113(8):3–10

Foote CL (2007) Space and time in macroeconomic panel data: young workers and state-level unemployment revisited. Working Paper 07-10, Federal Reserve Bank of Boston

Fuchs M, Wesling M, Weyh A (2014) Potenzialnutzung in Ostdeutschland: eine Analyse von Angebot und Nachfrage auf dem Arbeitsmarkt. IAB-Forschungsbericht 06/2014, Nürnberg

Garloff A, Pohl C, Schanne N (2013) Do small labor market entry cohorts reduce unemployment? Demogr Res 29(15):379–406

Giannakouris K (2010) Regional population projections EUROPOP2008: most EU regions face older population profile in 2030. Eurostat Statistics in focus 1/2010, Luxemburg

Goldstein JR, Kreyenfeld M (2011) Has east Germany overtaken west Germany? recent trends in order-specific fertility. Popul Dev Rev 37(3):453–472

Klinger S, Rothe T (2012) The impact of labour market reforms and economic performance on the matching of the short-term and the long-term unemployed. Scot J Polit Econ 59(1):90–114

Korenman S, Neumark D (2000) Cohort crowding and youth labor markets: a cross-national analysis. In: Blanchflower DG (ed) Youth employment and joblessness in advanced countries, NBER Comparative labor markets series, University of Chicago Press, chap 2, pp 57–105

Kruppe T, Müller E, Wichert L, Wilke RA (2008) On the definition of unemployment and its implementation in register data - the case of Germany. J Appl Soc Sci Stud 128(3):461–488

Lee L, Yu J (2010) Some recent developments in spatial panel data models. Reg Sci Urban Econ 40(5):255–271

LeSage JP (2008) An introduction to spatial econometrics. Rev Econ Ind 123(3):19–44

LeSage JP, Pace RK (2009) Introduction to spatial econometrics. CRC Press, Taylor & Francis Group, Boca Raton

Lisenkova K, Merette M, Wright R (2013) Population ageing and the labour market: modelling size and age-specific effects. Econ Model 35:981–989

Matthews SA, Parker DM (2013) Progress in spatial demography. Demogr Res 28(10):271–312

Michaelis J, Debus M (2011) Wage and (un-)employment effects of an ageing workforce. J Popul Econ 24(4):1493–1511

Moran P (1950) Notes on continuous stochastic phenomena. Biometrika 37(1):17–23

Nordström-Skans O (2005) Age effects in Swedish local labor markets. Econ Lett 86(3):419–426

Ochsen C (2009) Regional labor markets and aging in germany. University of Rostock, Thünen Series Working Paper 102

Perry GL (1970) Changing labor markets and inflation. Brookings Papers on Economic Activity pp 411–441

Pissarides CA (2000) Equilibrium unemployment theory. MIT Press, Cambridge

Rees P, van der Gaag N, de Beer J, Heins F (2012) European regional populations: current trends, future pathways, and policy options. Eur J Popul 28(4):385–416

Sander N (2014) Internal migration in Germany, 1995–2010: new insights into east-west migration and re-urbanisation. Comp Popul Stud 39(2):217–246

Schnabel K (2016) United, yet apart? A note on the persistent labour market differences between Western and Eastern Germany. Forthcoming in J Econ Stat 236(2)

Shimer R (1999) Why is the U.S. unemployment rate so much lower? NBER Macroeconomics Manual 13:11–74

Shimer R (2001) The impact of young workers on aggregate labor markets. Q J Econ 116(3):969–1007

White H (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48(4):817–838

Zimmermann KF (1991) Ageing and the labor market: age structure, cohort size and unemployment. J Popul Econ 4(3):177–200

Titel: Unemployment decline in East Germany: the role of demography
verfasst von: Michaela Fuchs
Publikationsdatum: 06.04.2016
Verlag: Springer Berlin Heidelberg
Erschienen in: Review of Regional Research / Ausgabe 2/2016
Print ISSN: 0173-7600
Elektronische ISSN: 1613-9836
DOI: https://doi.org/10.1007/s10037-016-0106-3

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 2/2016

Knowledge, innovation, agglomeration and regional convergence in the EU: motivating place-based regional intervention

Christian Warnecke: Universitäten und Fachhochschulen im regionalen Innovationssystem – Eine deutschlandweite Betrachtung

Regional industrial diversification: evidence from German gross value added

Labor migration and overeducation among young college graduates