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The Empirical Relevance of the New Economic Geography: Testing for a Spatial Wage Structure in Germany

Author

Listed:
  • Steven Brakman
  • Harry Garretsen
  • Marc Schramm

Abstract

In this paper we want to shed some light on the empirical relevance of the new economic geography. Using one of the central features of the core new economic geography models, namely that wages have the tendency to fall the further one moves away from centres of economic activity, we investigate the existence of a spatial wage structure for post-unification Germany. We find support for a spatial wage structure for German city-district wages, and hence indirectly for the relevance of a new economic geography model for Germany. We also find that demand linkages in Germany are strongly localised and that the “old” border still matters to the extent that economic interactions between western and eastern Germany are still limited compared to the situation within these two parts of Germany.

Suggested Citation

  • Steven Brakman & Harry Garretsen & Marc Schramm, 2000. "The Empirical Relevance of the New Economic Geography: Testing for a Spatial Wage Structure in Germany," CESifo Working Paper Series 395, CESifo.
    • Handle: RePEc:ces:ceswps:_395
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    2. Matthew J. Holian & Matthew E. Kahn, 2014. "Household Demand for Low Carbon Public Policies: Evidence from California," NBER Working Papers 19965, National Bureau of Economic Research, Inc.
    3. Annekatrin Niebuhr, 2003. "Market Potential and Regional Disparities in Europe," ERSA conference papers ersa03p178, European Regional Science Association.
    4. S. Brakman & H Garretsen & M. Schramm, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-09, Utrecht School of Economics.
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    8. Alejandro Díaz-Bautista, 2003. "Convergence And Economic Growth Considering Human Capital And R&D Spillovers," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 2(2), pages 127-143, Junio 200.
    9. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2002. "New Economic Geography in Germany: Testing the Helpman-Hanson Model," Discussion Paper Series 26183, Hamburg Institute of International Economics.
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    11. Tomasz Brodzicki & Dorota Ciolek, 2015. "Territorial capital and Polish regional development. A neoclassical approach," Working Papers 1511, Instytut Rozwoju, Institute for Development.
    12. Klaus Schöler, 2006. "Transformationsprozesse und Neue Ökonomische Geographie: Erklärungsbeiträge der Neuen Ökonomischen Geographie zur Transformation der ostdeutschen Volkswirtschaft," Volkswirtschaftliche Diskussionsbeiträge 85, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    13. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2001. "New economic geography in Germany: testing the Helpman-Hanson model," Research Report 01D46, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    14. repec:use:tkiwps:088 is not listed on IDEAS
    15. Page, William, 2003. "Germany's Mezzogiorno revisited: Institutions, fiscal transfers and regional convergence," Research Notes 9, Deutsche Bank Research.
    16. Natalya Petrovna Ryzhova, 2012. "Spatial Effects of International Economic Integration (in the case of Russian Regions)," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 28-48.
    17. Niebuhr, Annekatrin, 2004. "Market Access and Regional Disparities: New Economic Geography in Europe," Discussion Paper Series 26148, Hamburg Institute of International Economics.
    18. Matthew J. Holian & Matthew E. Kahn, 2015. "Household Demand for Low Carbon Policies: Evidence from California," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 205-234.
    19. Pedro E. Moncarz, 2007. "Regional employment and wages. The effects of transport costs and market potential. An application for Argentina," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 45(1), pages 75-108, Junio.
    20. Gabriel M. Ahlfeldt & Arne Feddersen, 2010. "From periphery to core: economic adjustments to high speed rail," Working Papers 2010/38, Institut d'Economia de Barcelona (IEB).
    21. Faíña, Andrés & López-Rodríguez, Jesús, 2006. "European Union Enlargement, European Spatial Development Perspective and Regional Policy: Lessons from Population Potentials," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 9, pages 3-21.
    22. Ulrich Zierahn, 2012. "The effect of market access on the labor market: Evidence from German reunification," MAGKS Papers on Economics 201239, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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    More about this item

    Keywords

    New economic geography; spatial wage structure; Germany;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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