Divergent regional development, factor mobility, and nontraded goods

Using an endogenous growth model with learning-by-doing effects in the production of a traded good, we derive divergent regional-growth paths in a two-region-three-good setting. A nontraded-goods sector using a mobile as well as an immobile factor of production provides the possibility of a steady-state equilibrium with a dispersed distribution of mobile workers. The paper investigates regional specialization, trade, and migration patterns in the steady-state equilibrium as well as in the transition process towards the steady-state. The long-run production and trade patterns of the regions are determined by history-dependent processes.     

Combining Significance of Correlated Statistics with Application to Panel Data*

The inverse normal method, which is used to combine P‐values from a series of statistical tests, requires independence of single test statistics in order to obtain asymptotic normality of the joint test statistic. The paper discusses the modification by Hartung (1999, Biometrical Journal, Vol. 41, pp. 849–855) , which is designed to allow for a certain correlation matrix of the transformed P‐values. First, the modified inverse normal method is shown here to be valid with more general correlation matrices. Secondly, a necessary and sufficient condition for (asymptotic) normality is provided, using the copula approach. Thirdly, applications to panels of cross‐correlated time series, stationary as well as integrated, are considered. The behaviour of the modified inverse normal method is quantified by means of Monte Carlo experiments.     

Spatial mobility and competition for jobs: Some theory and evidence for Western Germany

This paper sheds new light on the role of regional labor market conditions for regional mobility. We study competition for vacant jobs along two dimensions – between employed and unemployed job searchers, and between resident and non-resident job searchers – within a simple matching framework. Evidence from estimating regional matching functions with data on job searchers disaggregated by previous employment status and regional provenance indicates that competition for jobs along both dimensions affects hiring. Tests of the theoretical predictions suggest that labor market conditions do determine regional mobility, but the countervailing effects of competition between employed and unemployed dilute mobility effects.     

Federal Monetary Policy: A Comment

We comment on an article published in this journal by Hefeker (2003) and reveal an inconsistency in his analysis of monetary policy in federal monetary unions. We clarify an implicit assumption in his model and show that even when this further assumption is met, Hefeker's (2003) claim that a pure majority vote by the regions and the central government results in a monetary authority consisting solely of regionally appointed governors is not generally valid in the context of his model.     

Inference on the cointegration rank in fractionally integrated processes

For univariate time series we suggest a new variant of efficient score tests against fractional alternatives. This test has three important merits. First, by means of simulations we observe that it is superior in terms of size and power in some situations of practical interest. Second, it is easily understood and implemented as a slight modification of the Dickey–Fuller test, although our score test has a limiting normal distribution. Third and most important, our test generalizes to multivariate cointegration tests just as the Dickey–Fuller test does. Thus it allows to determine the cointegration rank of fractionally integrated time series. It does so by solving a generalized eigenvalue problem of the type proposed by Johansen (J. Econ. Dyn. Control 12 (1988) 231). However, the limiting distribution of the corresponding trace statistic is χ², where the degrees of freedom depend only on the cointegration rank under the null hypothesis. The usefulness of the asymptotic theory for finite samples is established in a Monte Carlo experiment.     

Profit sharing and firm size: The role of team production

This paper presents a model showing that profit sharing is subject to the 1/N problem in the case of independent worker productivity but not in the case of interdependent worker productivity. This implies the role of firm size on the likelihood of profit sharing will differ by the nature of the underlying technology. We test this implication using German establishment data and using a proxy for interdependent worker productivity. The results conform to the theory showing that firm size is associated with reduced profit sharing use when technology is independent but not when technology is interdependent.     

Did the Hartz Reforms Speed‐Up the Matching Process? A Macro‐Evaluation Using Empirical Matching Functions

Abstract. Starting in January 2003, Germany implemented the first two so-called Hartz reforms, followed by the third and fourth packages of Hartz reforms in January 2004 and January 2005, respectively. The aim of these reforms was to accelerate labor market flows and reduce unemployment duration. Without attempting to evaluate the specific components of these Hartz reforms, this paper provides a first attempt to evaluate the overall effectiveness of the first two reform waves, Hartz I/II and III, in speeding up the matching process between unemployed and vacant jobs. The analysis is conceptually rooted in the flow-based view underlying the reforms, estimating the structural features of the matching process. The results indicate that the reforms indeed had an impact in making the labor market more dynamic and accelerating the matching process.