Amit Batabyal (p), Hamid Beladi

Gabriele Wydra-Somaggio

We study aspects of economic growth in a region that is creative a la Richard Florida. Members of the creative class possess creative capital and they fall into one of two possible groups---they are either artists or engineers. We describe the optimal income redistribution rule that maximizes the creative class’s average steady state income. Because this average income is increasing in the physical capital per creative class member ratio, the rule requires a regional authority to redistribute income away from (towards) the group that saves a lower (higher) fraction of its income. This is a negative finding in the sense that the rule’s implementation will tend to favor the group that already saves more. Even so, the finding is consistent with the observation made by some researchers that there is a connection between income inequality and regions in which the creative class performs a large part of all economic activities.

Nikolaos Terzidis (p), Steven Brakman , Raquel Ortega-Argiles

Amit Batabyal

see extended abstract

Michael Weber (p)

Nikolaos Terzidis

This paper documents the inequality between East and West Germany in terms of long-term earnings and employment biographies after the German reunification. Over 22 years, from 1993 to 2014, East Germans earned on average half as much as West Germans, were 3 years less employed and 2.5 years more unemployed. The long-term earnings gap is largest for workers who were prime-age at the time of reunification.

Gabriele Wydra-Somaggio (p), Michaela Fuchs, Anja Rossen, Antje Weyh

Michael Weber

Among the manifold aspects of why women earn less than men, the question why the gender pay gap (GPG) varies considerably within a country has received very little attention so far. This paper aims to shed light on the determinants of the large regional disparities in the GPG within Germany that encompass a range between -4% and 43%. Besides providing detailed descriptive evidence for the NUTS3-regions, we quantify the impact of region-specific characteristics in addition to factors related to the individuals and to the establishments they work in. Our quantile decomposition approach rests on a comprehensive data set encompassing all employees liable to social security contributions in the year 2015. Results show that the impact of the individual and establishment determinants differs markedly between the regions. Whereas the sectoral affiliation and the existence of well-paid jobs are important factors in the regions with a high GPG, it is rather the individual characteristics that come into play in regions with a low GPG. Specific regional characteristics contribute only slightly to the GPG in all regions. This underscores the role played by the establishment composition in a region and the kind of jobs provided for explaining regional variation in the GPG. We conclude that one major reason why women earn more than men in some regions is a weak local economic structure that otherwise benefits men in regions with a high GPG.