The regional significance of university locations in Lower Saxony

Universities are important economic actors and make a considerable impact on the demand and supply side of their local economies. The aim of this paper is to quantify, compare and classify the different economic demandand supply-side contributions of the university locations within Lower Saxony (Germany) using a combination of multiplier analysis and spatial econometrics on a NUTS 3 level. In comparison to numerous other studies, this paper does not focus on the economic impact of individual cases or a selected university location but gives a complete picture of the importance and significance of all university locations within Lower Saxony. The income-induced direct and indirect demand effects are estimated using a rich data set of higher education statistics in combination with an income and employment multiplier derived from a regional input-output table. The supply-side effects, i.e. the impact of the education and research outcomes, are estimated with the help of spatial panel regressions, a model derived from human capital theory and knowledge spillover theory. The estimation results give a complete and reproducible impression of the importance and significance of the different university locations, offering the opportunity for comparisons and classifications.