IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa12p808.html
   My bibliography  Save this paper

Modelling Migration and Regional Labour Markets: An Application of New Economic Geography Model Rhomolo

Author

Listed:
  • D'Artis Kancs
  • Enrique Lopez-Bazo
  • Fabio Manca
  • Damiaan Persyn

Abstract

The objective of the present paper is to study the impact of R&D investment on inter-regional labour migration and inter-sectoral labour reallocation in the EU, specifically at regional level. In order to capture important general equilibrium effects, we employ a structural NEG model called RHOMOLO. The RHOMOLO model is a dynamic spatial general equilibrium (DSGE) modelling framework capturing 270 NUTS2 regions in EU-27, and decomposing the economy into 6 sectors. The current base year of RHOMOLO, and to which structural parameters’ estimates are used to calibrate the model, is 2007. As a first step of our analysis we econometrically estimate both (i) within country and (ii) across countries migration flows as a function of relative population, relative real wages per employee, relative unemployment rate and regional connectivity (as proxied by bilateral trade between origin and destination regions normalised by the total of their GDP). Our econometric findings suggest that within-country migration is subject to much the same economic forces as between-country migration, with estimates of the coefficients of relative wages and relative unemployment within in the same range. Secondly, we econometrically estimate the R&D and human capital elasticities, which are key parameters in the semi-endogenous growth module of RHOMOLO to assess the impact of R&D investment on TFP growth. In our next step we produce regional scenarios for R&D investments according to the objective of the Europe 2020 strategy and use them to simulate a shock in R&D investments at the regional levels needed to meet the Europe 2020 strategy. Finally, we combine the previous work together in order to simulate the impact on employment levels of regional R&D investments through the geographically heterogeneous effect that they have on migration flows and on labour supply in each EU region. The geographical distribution of R&D expenditures is shown to affect migration flows as well as employment levels at the regional level by increasing skills in those regions affected by R&D expenditures. Spillover effects on neighbouring regions are also observed.

Suggested Citation

  • D'Artis Kancs & Enrique Lopez-Bazo & Fabio Manca & Damiaan Persyn, 2012. "Modelling Migration and Regional Labour Markets: An Application of New Economic Geography Model Rhomolo," ERSA conference papers ersa12p808, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa12p808
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00810.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Olga Ivanova & d'Artis Kancs & Dirk Stelder, 2009. "Modelling Inter-Regional Trade Flows: Data and Methodological Issues in Rhomolo," EERI Research Paper Series EERI RP 2009/31, Economics and Econometrics Research Institute (EERI), Brussels.
    2. d’Artis Kancs, 2011. "Labour migration in the enlarged EU: a new economic geography approach," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 14(2), pages 171-188.
    3. Andries Brandsma & D'Artis Kancs, 2015. "RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the European Union's R&D Policies," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1340-1359, August.
    4. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, April.
    5. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
    6. Damiaan Persyn & Wouter Torfs, 2012. "A Gravity Equation for Commuting," Working Papers of VIVES - Research Centre for Regional Economics 545998, KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics.
    7. Benhabib, Jess & Spiegel, Mark M., 2005. "Human Capital and Technology Diffusion," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 13, pages 935-966, Elsevier.
    8. Enrique López-Bazo & Elisabet Motellón, 2011. "The regional distribution of unemployment. A microeconomic perspective," ERSA conference papers ersa11p1128, European Regional Science Association.
    9. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    10. Schmidheiny, Kurt & Brülhart, Marius, 2011. "On the equivalence of location choice models: Conditional logit, nested logit and Poisson," Journal of Urban Economics, Elsevier, vol. 69(2), pages 214-222, March.
    11. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    12. Todd Sorensen & Price V. Fishback & Samuel Allen & Shawn E. Kantor, 2007. "Migration Creation, Diversion, and Retention: New Deal Grants and Migration: 1935-1940," NBER Working Papers 13491, National Bureau of Economic Research, Inc.
    13. Fabrizio Barca & Philip McCann & Andrés Rodríguez‐Pose, 2012. "The Case For Regional Development Intervention: Place‐Based Versus Place‐Neutral Approaches," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 134-152, February.
    14. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    15. Varga, Janos & in 't Veld, Jan, 2011. "A model-based analysis of the impact of Cohesion Policy expenditure 2000–06: Simulations with the QUEST III endogenous R&D model," Economic Modelling, Elsevier, vol. 28(1), pages 647-663.
    16. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    17. Chiara Bentivogli & Patrizio Pagano, 1999. "Regional Disparities and Labour Mobility: the Euro‐11 versus the USA," LABOUR, CEIS, vol. 13(3), pages 737-760, September.
    18. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    19. Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas [‘The macroeconomics of low inflation’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(45), pages 6-59.
    20. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    21. David G. Blanchflower & Andrew Oswald, 1995. "International Wage Curves," NBER Chapters, in: Differences and Changes in Wage Structures, pages 145-174, National Bureau of Economic Research, Inc.
    22. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
    23. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    24. Stefan Boeters & Luc Savard, 2011. "The Labour Market in CGE Models," Cahiers de recherche 11-20, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    25. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
    26. d'Artis Kancs, 2011. "Labour migration in the enlarged EU: a new economic geography approach," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 14(2), pages 171-188.
    27. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
    28. repec:hhs:iuiwop:430 is not listed on IDEAS
    29. Andries Brandsma & d'Artis Kancs & Philippe Monfort & Alexandra Rillaers, 2015. "RHOMOLO: A dynamic spatial general equilibrium model for assessing the impact of cohesion policy," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 197-221, November.
    30. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, vol. 99(397), pages 739-755, September.
    31. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    32. Sanz-de-Galdeano, Anna & Turunen, Jarkko, 2006. "The euro area wage curve," Economics Letters, Elsevier, vol. 92(1), pages 93-98, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pavel Ciaian & d'Artis Kancs, 2015. "Assessing the Social and Macroeconomic Impacts of Labour Market Integration: A Holistic Approach," JRC Research Reports JRC99645, Joint Research Centre.
    2. Persyn, Damiaan & Torfs, Wouter & Kancs, d’Artis, 2014. "Modelling regional labour market dynamics: Participation, employment and migration decisions in a spatial CGE model for the EU," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 29, pages 77-90.
    3. Andries Brandsma & d'Artis Kancs & Philippe Monfort & Alexandra Rillaers, 2015. "RHOMOLO: A dynamic spatial general equilibrium model for assessing the impact of cohesion policy," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 197-221, November.
    4. Andries Brandsma & D'Artis Kancs, 2015. "RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the European Union's R&D Policies," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1340-1359, August.
    5. Francesco Di Comite & d'Artis Kancs & Patrizio Lecca, 2018. "Modeling agglomeration and dispersion in space: The role of labor migration, capital mobility and vertical linkages," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 555-577, August.
    6. d'Artis Kancs & Patrizio Lecca, 2018. "Long‐term social, economic and fiscal effects of immigration into the EU: The role of the integration policy," The World Economy, Wiley Blackwell, vol. 41(10), pages 2599-2630, October.
    7. Sharma, Hari, 2020. "The effect of emigration and remittances on labour supply of the left-behind: Evidence from Nepal," MPRA Paper 102091, University Library of Munich, Germany.
    8. Luis Ayala & Javier Martín‐Román & Juan Vicente, 2020. "The contribution of the spatial dimension to inequality: A counterfactual analysis for OECD countries," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 447-477, June.
    9. Olga Ivanova & d'Artis Kancs & Dirk Stelder, 2009. "Modelling Inter-Regional Trade Flows: Data and Methodological Issues in Rhomolo," EERI Research Paper Series EERI RP 2009/31, Economics and Econometrics Research Institute (EERI), Brussels.
    10. Lecca, Patrizio & Persyn, Damiaan & Sakkas, Stelios, 2023. "Capital-skill complementarity and regional inequality: A spatial general equilibrium analysis," Regional Science and Urban Economics, Elsevier, vol. 102(C).
    11. Francesco Di Comite & D'Artis Kancs & Wouter Torfs, 2015. "Macroeconomic Modelling of R&D and Innovation Policies," JRC Research Reports JRC89558, Joint Research Centre.
    12. Damiaan Persyn, 2017. "Migration within the EU: investigating the role of education, income differences and cultural barriers," JRC Research Reports JRC104494, Joint Research Centre.
    13. Francesco Di Comite & Olga Diukanova & D'Artis Kancs, 2016. "RHOMOLO Model Manual: A Dynamic Spatial General Equilibrium Model for EU Regions and Sectors," JRC Research Reports JRC96776, Joint Research Centre.
    14. Francesco Di Comite & Patrizio Lecca & Philippe Monfort & Damiaan Persyn & Violeta Piculescu, 2018. "The impact of Cohesion Policy 2007-2015 in EU regions: Simulations with the RHOMOLO Interregional Dynamic General Equilibrium Model," JRC Working Papers on Territorial Modelling and Analysis 2018-03, Joint Research Centre.
    15. Patrizio Lecca & Javier Barbero Jimenez & Martin Aaroe Christensen & Andrea Conte & Francesco Di Comite & Jorge Diaz-Lanchas & Olga Diukanova & Giovanni Mandras & Damiaan Persyn & Stylianos Sakkas, 2018. "RHOMOLO V3:A Spatial Modelling Framework," JRC Research Reports JRC111861, Joint Research Centre.
    16. Jean Mercenier & Maria Teresa Alvarez Martinez & Andries Brandsma & Francesco Di Comite & Olga Diukanova & d'Artis Kancs & Patrizio Lecca & Montserrat Lopez-Cobo & Philippe Monfort & Damiaan Persyn & , 2016. "RHOMOLO-v2 Model Description: A spatial computable general equilibrium model for EU regions and sectors," JRC Research Reports JRC100011, Joint Research Centre.
    17. Trond G. Husby & Elco E. Koks, 2017. "Household migration in disaster impact analysis: incorporating behavioural responses to risk," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 87(1), pages 287-305, May.
    18. Brandsma, Andries & Di Comite, Francesco & Diukanova, Olga & Kancs, d’Artis & López-Rodríguez, Jesús & Persyn, Damiaan & Potters, Lesley, 2014. "Assessing policy options for the EU Cohesion Policy 2014-2020," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 29, pages 17-46.
    19. Lesley Potters & Andrea Conte & d'Artis Kancs & Mark Thissen, 2013. "Data Needs for Regional Modelling: A Description of the Data used in Support of RHOMOLO," JRC Research Reports JRC80845, Joint Research Centre.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pavel Ciaian & d'Artis Kancs, 2015. "Assessing the Social and Macroeconomic Impacts of Labour Market Integration: A Holistic Approach," JRC Research Reports JRC99645, Joint Research Centre.
    2. Persyn, Damiaan & Torfs, Wouter & Kancs, d’Artis, 2014. "Modelling regional labour market dynamics: Participation, employment and migration decisions in a spatial CGE model for the EU," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 29, pages 77-90.
    3. Francesco Di Comite & D'Artis Kancs & Wouter Torfs, 2015. "Macroeconomic Modelling of R&D and Innovation Policies," JRC Research Reports JRC89558, Joint Research Centre.
    4. Andries Brandsma & D'Artis Kancs, 2015. "RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the European Union's R&D Policies," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1340-1359, August.
    5. Jean Mercenier & Maria Teresa Alvarez Martinez & Andries Brandsma & Francesco Di Comite & Olga Diukanova & d'Artis Kancs & Patrizio Lecca & Montserrat Lopez-Cobo & Philippe Monfort & Damiaan Persyn & , 2016. "RHOMOLO-v2 Model Description: A spatial computable general equilibrium model for EU regions and sectors," JRC Research Reports JRC100011, Joint Research Centre.
    6. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
    7. Olga Ivanova & d'Artis Kancs & Dirk Stelder, 2009. "Modelling Inter-Regional Trade Flows: Data and Methodological Issues in Rhomolo," EERI Research Paper Series EERI RP 2009/31, Economics and Econometrics Research Institute (EERI), Brussels.
    8. Andries Brandsma & d'Artis Kancs & Philippe Monfort & Alexandra Rillaers, 2015. "RHOMOLO: A dynamic spatial general equilibrium model for assessing the impact of cohesion policy," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 197-221, November.
    9. d'Artis Kancs & Patrizio Lecca, 2018. "Long‐term social, economic and fiscal effects of immigration into the EU: The role of the integration policy," The World Economy, Wiley Blackwell, vol. 41(10), pages 2599-2630, October.
    10. Jens Suedekum, 2005. "Increasing returns and spatial unemployment disparities," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 159-181, June.
    11. Ulrich Zierahn, 2013. "Agglomeration, congestion, and regional unemployment disparities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 435-457, October.
    12. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    13. Kenmei Tsubota, 2009. "Agglomeration and wage bargaining," KIER Working Papers 675, Kyoto University, Institute of Economic Research.
    14. Solmaria Halleck Vega & J. Paul Elhorst, 2014. "Modelling regional labour market dynamics in space and time," Papers in Regional Science, Wiley Blackwell, vol. 93(4), pages 819-841, November.
    15. Bernard FINGLETON & Silvia PALOMBI, 2013. "The Wage Curve Reconsidered: Is It Truly An 'Empirical Law Of Economics'?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 49-92.
    16. Giuseppe Francesco Gori & Renato Paniccià, 2015. "A structural multisectoral model with new economic geography linkages for Tuscany," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 175-196, November.
    17. Francesco Di Comite & Olga Diukanova & D'Artis Kancs, 2016. "RHOMOLO Model Manual: A Dynamic Spatial General Equilibrium Model for EU Regions and Sectors," JRC Research Reports JRC96776, Joint Research Centre.
    18. Redding, Stephen J. & Weinstein, David E., 2016. "A unified approach to estimating demand and welfare," LSE Research Online Documents on Economics 67681, London School of Economics and Political Science, LSE Library.
    19. Vicente Rios Ibañez, 2014. "What drives regional unemployment convergence?," ERSA conference papers ersa14p924, European Regional Science Association.
    20. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa12p808. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.