Why are better educated and more risk-friendly persons more mobile across regions? To answer this question, we use micro data on internal migrants from the German Socio-Economic Panel (SOEP) 2000-2006 and merge this information with a unique proxy for region-pair-specific cultural distances...

We develop a new general equilibrium monopolistic competition model with variable demand elasticity, heterogeneous firms, and multiple asymmetric regions. Wages, productivity, consumption diversity, and markups across firms and markets are all endogenously determined and respond to trade...

The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We develop and quantify a novel framework to address this question at three...

"This paper analyses the impact of dynamic MAR- and Jacobs-externalities on local employment growth in Germany between 1993 and 2001. In order to facilitate a comparison between the neighbouring countries we firstly replicate the study of Combes (2000) on local employment growth in France and...

Regional differences in unemployment rates in the EU, both within and across member countries, are far more pronounced than regional income disparities. Yet, standard models of the new trade and location theories (new economic geography, new trade theory etc.) usually assume full employment and...

In this paper I analyze the impact of initial human capital on subsequent city employment growth for the case of West Germany (1977-2002). I find robust evidence that skilled local areas have grown stronger than unskilled ones. But this observed positive relation need not indicate a localized...

Suedekum J. (2006) Concentration and specialization trends in Germany since re-unification, Regional Studies 40, 861-873. This paper describes the development of regional specialization and geographical concentration in Germany from 1993 to 2001. It finds compelling evidence neither for a...

A very prominent instrument of regional policy is to foster education and human capital for-mation in economically lagging regions. However, this type of regional policy might actually hurt instead of help the recipient areas. The reason is that individual geographical mobility increases with...

Using comprehensive data for German establishments (1999-2008), we estimate plant-level production functions to analyze if “cultural diversity†affects total factor productivity. We distinguish diversity in the establishment’s workforce and in the aggregate regional labor force...

This paper offers a new mechanism to explain de-industrialisation in response to a price increase of the manufactured good. In our trade model, one sector (agriculture) is perfectly competitive while the other (manufacturing) is monopolistically competitive. Both industries use skilled and...