The spatial range of employment-population interactions. Exploring the functioning of labour markets in the Netherlands by means of a simultaneous equation model (400)

Theme Track: Labour Markets - Labour Supply and Market Area

Authors:
Hoogstra, Gerke ; van Dijk, Jouke

This paper focuses on interchanges between regional population and employment growth. In the literature of regional science, the possible interplay between the pair of changes has attracted considerable attention, most notably by means of a simultenous equation model set up by Carlino and Mills in the 1980s in which the supposed interchanges are empirically verified. Practically since Boarnet (1994) several studies that made use of such a model have explicitly taken into account that the spatial units of observation may not correspond with actual labour markets. Although such studies may have corrected for this spatial mismatch by using spatially weighted data, none has implemented several weight matrices to found out how the results may differ across the various matrix specifications. That means, up to now hardly any insight is obtained with respect to the most appropriate spatial weight matrix specification that reflects the actual size of labour markets. In this paper, a simultaneous equation model similar to Carlino and Mills (1987) is applied to the Netherlands to find out how the interplay between employment and population growth varies with different spatial weight specifications. The model is based on data set with very detailed spatial information on both set of changes (as measured at the level of postcode areas). From this detailed level of spatial analysis the data can easily be aggregated, so that sufficient insight in spatial range of employment-population interactions can be offered.

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