Local employment growth patterns and the Great Recession: The case of Spain

The 2008 financial and economic crisis has led to widespread destruction of employment in Spain. Using municipality data, I examine employment growth differences between urban cores, urban hinterlands, and rural areas during the pre‐crisis period and the recession period. The data show that patterns of growth and decline have been very uneven across different types of areas. While in the boom years, hinterlands and rural areas experienced higher growth, urban core areas have done better during the recession years. I then test three strands of explanations for local growth differences: (i) the role of the local sectoral composition, (ii) the role of human capital, and (iii) the role of access to urban core areas. Estimations for employment growth in the two periods show that the crisis has altered some of the drivers of local employment growth and that human capital has been a key determinant of local resilience during the Great Recession.     

RECESSIONARY SHOCKS AND REGIONAL EMPLOYMENT: EVIDENCE ON THE RESILIENCE OF U.K. REGIONS*

ABSTRACT We analyze the resilience of U.K. regions to employment shocks. Two basic notions of resilience are distinguished. With engineering resilience, there is an underlying stable growth path to which a regional economy rebounds following a shock. With ecological resilience, shocks can permanently affect the growth path of the regional economy. Our data set consists of quarterly employment series for 12 U.K. regions (NUTS I) for the period 1971–2010. Using a seemingly unrelated regression (SUR) model specification, we test for the relevance of (engineering) resilience of U.K. regional employment to the four recessionary shocks in our sample. It turns out that U.K. regions do indeed differ in their resilience, but that these differences mainly concern the initial resistance to these shocks and not so much the recovery stage. The SUR model does not allow shocks to have permanent effects and it also does not take the possibility of time differentiated shock spillovers between the 12 regions into account. To this end, we also estimate a vector error‐correction model (VECM) specification where employment shocks can have permanent effects and where also interregional employment linkages are included. We find that employment shocks typically have permanent effects when it concerns the own‐region effects. Permanent effects can also be found for the impact on other regions but the interregional effects are typically only significant for nearby regions.     

REGIONAL POPULATION–EMPLOYMENT DYNAMICS ACROSS DIFFERENT SECTORS OF THE ECONOMY*

ABSTRACT An important subset of the literature on agglomeration externalities hypothesizes that intrasectoral and intersectoral relations are endogenously determined in models of local and regional economic growth. Remarkably, structural adjustment models describing the spatio‐temporal dynamics of population and employment levels or growth traditionally do not include intersectoral economic dynamics. This paper argues and shows that allowing for economic linkages across sectors in these models adds considerable value, especially in forecasting. An econometric model of population–employment dynamics, in which sectoral variations in economic development are explicitly taken into account, is applied to a large urban planning policy proposal in the Netherlands. The empirical analyses suggest that population dynamics are largely exogenous, population changes drive employment in particular in the industry and retail sectors, and employment in all sectors depends strongly on intersectoral dynamics. Intersectoral dynamics appear as important drivers of regional sectoral employment changes; they are even more important than population changes, and their effect shows up clearly even within the Dutch institutional context where strict regulatory housing and planning restrictions are enforced.     

A DYNAMIC INTRSECTORAL,MODEL OF REGIONAL ECONOMIC GROWTH*

ABSTRACT. The dynamic relationship between sectoral value added and regional economic growth is analyzed using a stochastic intersectoral model estimated by ordinary least squares and linear systems techniques. A state-space portion of the model identifies the time element of sedoral value added. Dynamic multipliers, tracing the temporal path of regional growth, are calculated for the state of Georgia over the period 1963–1986. This application shows that the impacts of sectoral shocks can follow cyclical as well as monotonic patterns and that the direction and magnitude of the impact may change over time.     

INTRA-REGIONAL EMPLOYMENT GROWTH IN LUXEMBOURG (1994–2005)

The specialization of city-centres towards more advanced service activities has mostly been studied in the largest city-regions, the case of smaller urban centres being less well documented. In that context, the objective of this article is to analyse the role of sectoral and regional factors in employment growth in Luxembourg between 1994 and 2005. Using statistical data from the Luxembourg General Inspection of Social Security, this contribution distinguishes 12 categories of manufacturing industries and services according to an OECD-Eurostat knowledge-based classification. Five intra-regional areas are distinguished based on morphological and functional criteria in the Luxembourg Metropolitan Area. Using several indexes, this article first analyses the sectoral specialization and geographical concentration of employment. A model of intra-regional employment growth, initially developed by Marimon and Zilibotti and applied at the European level, is then shown to account for 40 per cent of employment growth. An estimation of the contributions of sectoral and geographical factors highlights the primacy of the latter over the former. Finally, the construction of virtual economies confirms the City's overall lower performance as compared to its close periphery. Results underscore a process of functional integration in the Luxembourg metropolitan area: as the core of the city undergoes a specialization process, the urban area benefits from a relocation of activities less sensitive to distance and transaction costs, while the periphery becomes increasingly diversified, notably in the South where traditional industrial activities are being replaced by service activities. These results suggest that the evolution pattern of employment growth in Luxembourg is very similar to that of some larger metropolitan centres, owing to its exceptional financial service activities.     

CENTRAL CITIES AND SUBURBS: ECONOMIC RIVALS OR ALLIES?*

ABSTRACT Theoretical models of urban development come to contradictory conclusions regarding the nature of central city–suburb interdependence. Unfortunately, empirical research into this relationship has been hampered by the lack of identifying information due to the endogeneity of factors affecting both central city and suburban growth. This paper resolves the identification problem by constructing an index that measures price shocks to export industries located in either center cities or their suburbs. The results indicate that positive export industry price shocks to one area have a positive spillover effect on the other. Interestingly, the cross‐elasticity of suburban employment with respect to center city employment (1.18) significantly exceeds the cross‐elasticity of central city employment with respect to suburban employment (0.24).     

Wildfire risk,salience, and housing development in the wildland–urban interface

As wildfires increase in both severity and frequency, understanding the role of risk saliency on human behaviors in the face of fire risks becomes paramount. While research has shown that homebuyers capitalize wildfire risk following a fire, studies of the role that risk saliency plays on residential development is limited. This paper aims to fill this gap by studying the link between wildfire risk saliency and the rate of residential development in wildfire-prone areas, by treating recent wildfires as conditionally exogenous shocks to saliency. Using geospatial data on residential development in Colorado, we show that saliency shocks due to wildfire lead to statistically significant reductions in the rate of new development in wildfire risk zones that last upwards of 5 years, a result that is robust to a number of alternative explanations. We explore the policy implications of these findings, noting that education on fire risks may curtail some but not all of the development in these high wildfire-risk areas due to the rapid growth of development in these regions.     

Small is not Necessarily Beautiful: An Evaluation of Policy Support for Small and Medium-sized Enterprises in Australia

One of the key strategies of the current Commonwealth government in Australia is to promote a dynamic entrepreneurial culture by improving the business environment for small and medium-sized enterprises (SMEs). This paper evaluates the contribution of SMEs to innovation and employment in Australia and reviews the international evidence on the value of SMEs. It concludes that a very small percentage of SMEs are responsible for most of the employment generation and innovation in the small-firm sector. The policy implication is that general deregulatory measures designed to support SMEs as a generic class are likely to create an environment within which low-quality, low-wage employment is generated in SMEs with little future. Instead, the sectoral composition of industrial activity and the social structures and relationships within which firms are embedded require greater policy attention.     

Child and Adolescent Obesity and Employment Sector in Urban China

Despite its importance as a part of the economic reform in China, sectoral employment has been overlooked as a potential determinant of child and adolescent obesity (CAO). Using large-scale longitudinal data from surveys conducted from 1989 to 2006, this paper examines the relationship between the sector in which a parent is employed and CAO, with the sector being based on ownership and categorised as either state or non-state. Analyses of over 1700 children and adolescents show that children and adolescents whose parents work in the state sector are less likely to be obese. Patterns of sectoral employment's effect are robust across time periods, in fixed-effects models, and across multiple measures of obesity. Additionally, the paper shows that socioeconomic characteristics of the parent, such as income, education, and occupation, typically thought to be important predictors of CAO, are not as important when the parental working sector is included in the models.     

Critical Events and Labour Mobility: Relocations in the Wake of the Ansett Airlines Collapse

Migration plays an important role in neo-liberal regional adjustment. This paper explores the role of economic shocks in stimulating internal migration within Australia. Drawing on the experiences of retrenched Ansett Airlines employees, it argues that economic crisis impels some households to relocate but traps others in places with restricted employment prospects. For some, the crisis of retrenchment triggers inter-state migration to take up new jobs. For others, it prompts relocation to less expensive housing, often in a geographically proximate location. These opposing responses, which are different outcomes of similar causal processes, exacerbate regional inequalities since they selectively encourage younger skilled workers to enter growing regions. The combination of high housing costs and insecure employment discourages speculative migration. The paper concludes with a brief discussion of the policy implications of these findings.     

Population–Employment Models: Stationarity, Cointegration, and Dynamic Adjustment

Abstract.  Population and employment in the 50 United States are found to be non‐stationary and cointegrated. Vector error correction (VEC) models exhibit dynamics with adjustment to shocks essentially completed in 30–35 years . This contrasts with adjustment periods between one and two centuries for non‐stationary models specified in levels. These dynamic adjustment patterns support the hypothesis that relatively long adjustment periods and slow dynamics are probably the spurious results of using non‐stationary levels of population and employment outside of a VEC model framework. Recommendations for modeling the population–employment relationship are offered based on the findings reported.     

Boundary spanning regimes and public policy change: the convergence of welfare and immigration policies

The concept of boundary spanning regimes has emerged to describe activity across policy subsystems that seek to manage ‘wicked’ public policy problems. This paper examines two existing public policy theories, namely those of exogenous shocks and the Advocacy Coalition Framework theories and assesses their capacity to explain why boundary spanning regimes emerge. It argues that broad structural conditions play an important role in shaping boundary spanning activity in the case studies discussed in this paper, indicating limitations in these theories which tend to overlook such conditions. The paper tests the explanations for policy change through original qualitative analysis of incremental convergence across the welfare and immigration policy fields in Australia from 1947 to 1996.     

Commuting, Migration, and Rural-Urban Population Dynamics

Over the past 25 years social scientists attempting to explain the dramatic changes in the relative distribution of urban and rural population growth have gravitated toward two competing explanations. The regional restructuring hypothesis holds that changes in the spatial distribution of employment opportunities have been dominant whereas the deconcentration hypothesis attributes these changes to changes in residential preferences of workers and consumers. We develop an empirical test of these two explanations based on whether commuting and migration are positively or negatively related after controlling for other economic factors. Our econometric results support the deconcentration hypothesis.     

Theories of Governance: Comparative Perspectives on Seattle's Light Rail Project

Governance entails the formulation and implementation of public policies across organizational and sectoral boundaries through coalitions, contracts, and networks. Studies of governance tend to cluster loosely into two theoretic traditions: rational choice and sociological institutionalism. Where the former analyzes actors’ individual interests and information, the latter examines their joint relationships and norms. These different analytic foci can be difficult to reconcile, leaving scholars at a loss as to how to cumulate insights and knowledge across the theoretic traditions. To understand better how the two traditions conflict and support one another in the analysis of governance, this article distinguishes domains of governance and identifies the different theories that the traditions use to study each domain. A case study of a rail transit project compares the insights from these theories, and assesses the quality and the complementarities of the explanations they offer. An analysis of the case generates propositions about the comparative utility of different concepts and theoretic traditions for understanding key governance phenomena.     

Determinants of regional resilience to economic crisis: a European perspective

The impact of the economic crisis has been highly asymmetric across the European regions. The objective of this paper is to investigate the determinants of resilience to economic crisis across European regions. Regional economic resilience was assessed based on employment changes during 2008–2013, while socioeconomic determinants were analysed pre-crisis (2002–2007). A highly heterogeneous pattern of resilience was observed within countries, while significant differences were also revealed between the continental northern-central regions and the southern periphery. A multilevel logistic regression model indicated the magnitude of country-effects on the performance of regional employment during crisis periods. Both EU-referenced and country-referenced regional resilience identified the positive effect of accessibility and the negative effect of a large manufacturing sector in the ability of regions to withstand recessionary shocks. Education and economic development level positively affected the resilience of both large and small regional European economies. Investing in education enhances the spatial homogeneity across Europe in terms of its ability to react to economic shocks. The results reveal the importance of narrowing disparities among regions and formulating targeted and differentiated regional development policies at country level, taking into consideration the size of the economy of the regions.     

An empirical examination of shift-share instruments

Bartik's (1991, 1993) approach to identifying shocks in demand to regional economies has been used extensively for nearly 30 years. We chronicle the development of Bartik-type shift-share instruments and examine the empirical performance of alternative versions that use different combinations of national shift and local share variables in their construction. We offer three main findings. First, instruments constructed from shares that omit employment in nontraded sectors empirically dominate versions that include total employment. Second, industrial sectors with high average shares and low variation across areas are more likely to be nontraded and endogenous. This suggests placing large weights on nontraded sector shares worsens both relevance and potential endogeneity. Finally, we demonstrate national shifters other than employment, such as prices and wages, can be used to construct instruments with unique and relevant explanatory power.     

Women of Steel: Constructing and Contesting New Gendered Geographies of Work in the Australian Steel Industry

The article argues that although structuralist-inspired approaches to steel restructuring have provided significant insights and recognised the role of "labour" in sectoral change, such studies have predominantly equated labour politics with unionism, downplaying the impact of other forms of workers' politics. This has created a problematic disjunction between "real world" events and academic research, with ensuing issues for policy development and delivery. In response to this difficulty, the paper builds on Herod's concept of a labour geography to develop multiple labour geographies of power, an approach that describes different forms of workers' politics. To illustrate this approach, the paper presents female steelworkers' politics of restructuring. It details the Jobs for Women Campaign in Wollongong, Australia, a 1980s place-based initiative that sought to gain blue-collar employment for women in the local steelworks. The study demonstrates how female steelworkers developed restructuring politics addressing gender and employment discrimination, issues not normally associated with labour politics. The paper concludes that such workers' struggles need to be analysed as they affect restructuring impacts and processes.     

ECONOMIC FUNDAMENTALS IN LOCAL HOUSING MARKETS: EVIDENCE FROM U.S. METROPOLITAN REGIONS

ABSTRACT.  This paper investigates the effects of national and regional economic conditions on outcomes in the single-family housing market: housing prices, vacancies, and residential construction activity. Our three-equation model confirms the importance of changes in regional economic conditions, income, and employment on local housing markets. The results also provide the first detailed evidence on the importance of vacancies in the owner-occupied housing market on housing prices and supplier activities. The results also document the importance of variations in materials, labor and capital costs, and regulation in affecting new supply. Simulation exercises, using standard impulse response models, document the lags in market responses to exogenous shocks and the variations arising from differences in local parameters. The results also suggest the importance of local regulation in affecting the pattern of market responses to regional income shocks.     

CITIES,TASKS, AND SKILLS

This research applies a task‐based approach to measure and interpret changes in the employment structure of the 168 largest U.S. cities in the period 1990–2009. As a result of technological change some tasks can be placed at distance, while others require proximity. We construct a measure of task connectivity to investigate which tasks are more likely to require proximity relative to others. Our results suggest that cities with higher shares of connected tasks experienced higher employment growth. This result is robust to a variety of other explanations including industry composition, routinization, and the complementarity between skills and cities.     

TELECOMMUNICATION EXTERNAL ECONOMIES,CITY SIZE AND OPTIMAL PRICING FOR TELECOMMUNICATIONS*

ABSTRACT. In this paper I make use of a city systems model to examine how telecommunications may affect cities in urban systems. The model offers an explanation for the observation that the share of employment in the communication-intensive producer-service sector increases with city size in the U.S. I suggest that external scale economies associated with metropolitan employment size, telecommunication network size and total number of intrametropolitan telecommunication contacts are possible explanations for this observation. I go on to suggest that the presence of telecommunication size and contact level external scale economies at the metropolitan level affects the optimal price that should be charged for local telecommunication services.