Anja Rossen (p), Uwe Blien, Oliver Ludewig

Lorenz Benedikt Fischer

In recent times the employment effects of technical progress raised much intention. Will recent productivity gains lead to technological unemployment or to a new pros-perity? In our paper it is shown formally that under general and standard precondi-tions the price elasticity of demand on product markets is decisive: Technological progress leads to an expansion of employment if product demand is elastic. It is ac-companied, however, by shrinkage of employment if product demand is inelastic. A transition from the elastic into the inelastic range of the demand function for the most important product(s) can already suffice to plunge a region into crisis.

In our empirical analysis we use industry level time series data on output, prices, employment and national income for Germany provided by the Federal Statistical Office. We estimate Marshallian type demand functions using an instrumental varia-bles estimator to derive the price elasticities for different industries and link this in-formation to the regional labour market performance of the respective industries and regions.

Ruben Hernandez Murillo (p), Michael Owyang, Amy Guisinger

Anja Rossen

Okun's law is an empirical relationship that measures the correlation between the deviation of the unemployment rate from its natural rate and the
deviation of output growth from its potential. This relationship is often referred to by policy makers and used by forecasters. In this paper, we estimate Okun's coefficients separately for each U.S. state using an
unobserved components framework and find variation of the coefficients across states. We exploit this heterogeneity of Okun's coefficients to directly examine the potential factors that shape Okun's law, and find that indicators of more flexible labor markets (higher levels of education achievement in the population, lower rate of unionization, and a higher share of
non-manufacturing employment) are important determinants of the differences in Okun's coefficient across states.

Lorenz Benedikt Fischer (p)

Ruben Hernandez Murillo

This paper presents a multi-regional search model to show that increasing labor mobility can increase or decrease regional disparities in unemployment, depending on the current state of the system. In line with theory, investigation of German NUTS 3 regions shows a decreasing (increasing) effect of immigration (emigration) on unemployment in the short-run, pointing towards increasing regional disparities. The autocorrelation coefficient in proximity to one prohibits long-run predictions. Estimation follows recent (quasi) maximum likelihood approaches which show a number of advantages compared to popular GMM approaches. Results indicate that the total impact on unemployment differentials appears incidental. Further, regions' immigrants hardly appear to differ from regions' emigrants.