Sources of fluctuations in regional growth

This paper re-examines the role of employment and population growth in regional development. Previous studies have found evidence for both the "chicken and the egg": both demand-side employment shocks and supply-side population shocks have been found to influence regional growth. Using recent developments in causality testing for pooled samples, this study also finds evidence of bivariate causality, but support for the "people follow jobs" approach to regional development is marked by results that are more consistent and more often statistically significant. Impulse response functions also sustain this point.