Barbara Schwengler (p), Per Kropp

In recent years, several studies in various countries have addressed the delineation of functional regions based on commuting flows. Most of these studies have focused on one method and have used data from one year. Due to increasing number of commuters and distances of home-to-work travel in recent decades, this study extends the research on how increased commuting influences the shape and size of functional labour market regions in Germany over time.
Applying a three-step method, functional labour market regions are delineated by using commuting data for all employed persons in Germany on municipality level from 1993 to 2013 and the results are aggregated into seven groups of three years. By comparing the results of these different delineations with each other, regions are classified into three categories as stable “core regions”, “related regions” and “over-lapping regions”.
The main finding is that regions surrounding important labour market centres form stable labour markets. Over time, most employees belong to the same labour market region or parts of it. However, increasing mobility has reduced the share of the regional labour force living and working within labour market regions. As a result, both the number of labour market regions and the quality of the delineations have decreased over time. Applying the three categories “core regions”, “related regions” and “overlapping regions” and the three-step method, this study can assess the quality and robustness of this method and analyse stability over time.

Aleksandra Majchrowska (p), Pawel Strawinski

The aim of the paper is to analyse the regional effects of minimum wage policy in Poland. The number of research on the impact of minimum wage on employment and unemployment is enormous. Majority of the results points to some small and negative impact of minimum wage growth on employment (for revision see Neumark and Wascher, 2007 and Kuddo et al., 2015). The eventual disemployment effects are found for workers with relatively low professional qualifications and low labour market experience. Uneven distribution of workers with these characteristics across regions may result in the differences of the impact of minimum wage changes in regional labour markets. This problem may arise especially in the countries where minimum wage policy is established at the national level and the differences between regions are significant. In this paper we took Poland as an example of such a country. We use individual data from the Structure of Earnings Survey in Poland, published biannually by Central Statistical Office. The research period covers the years 2008-2016.
In the first step we analyse differences in the share of workers earning not more than 105% of minimum wages across regions and the structure of minimum wage earners by both their characteristics and characteristics of their employers. In the second step we identify regions which may be particularly affected by minimum wage changes (low-wage regions). In the third step we check the asymmetry of the effects of minimum wage on employment across regions. We verify whether in low-wage regions, the national minimum wage is too high when compared to local productivity and therefore harmful to employment prospects. To account for possible spillover effects we add spatial dependencies to panel model. We estimated both SAR and SDM models with contiguity matrix.
The results indicate that in the whole sample the impact of minimum wage is not significant for employment. However in few regions the parameter is negative and significant. These are the least developed, Eastern regions of Poland with low productivity and low average wage level. Moreover we found that relatively high minimum wage in these regions seems to increase the employment among the prime-aged workers. Our results support the OECD recommendations for Poland: “Refrain from increasing the minimum-to-average wage ratio. Consider differentiating the minimum wage across regions depending on local labor market conditions” (OECD, 2016).

Jaime Cuéllar Martín (p), Ángel Luis Martín Román (p), Alfonso Moral de Blas

The aim of this paper is to analyze how the relationship between the business cycle and the labor force participation may be influenced by “social effects”. The so-called “Bandwagon Effect” (BE) is now an important element to better understand the demand for goods and services (Leibenstein, 1950). As the labor supply is, in the end, a demand for leisure, we deem that the BE might be also operating in the labor market. In this paper, we construct a theoretical model coining a new concept, the Bandwagon Worker Effect (BWE). In this way, we test empirically whether the BWE is a significant factor, when considered together with the Added Worker Effect (AWE) and the Discouraged Worker Effect (DWE), to better understand cyclical movements in labor supply.

First we elaborate a microeconomic decision model, in which the AWE is conceptualized as an income effect and the DWE as an effect depending on the expectations of finding a job. The next step is incorporating the BWE within the previous theoretical framework, under the assumption that the BWE is a social effect. Another important feature that adds to the originality of this paper is that we make use of conventional spatial econometrics techniques to do that (Moran´s I). Moreover, the empirical test is derived straightforwardly from the theoretical framework, so we assume here that geographical neighborhood is a tool to capture the degree and the intensity of the “social effects”.

The results obtained show a positive and significant global spatial dependence in the cyclical sensitivity of the labor force participation rates in the Spanish provinces (NUTS-3 regions). According to our theoretical approach, this finding proves that the BWE is a key phenomenon to help understand the overall functioning of the aggregate labor market. This result is robust to two different neighborhood criteria and two different trend-cycle decompositions of time series.

Moreover, we also find that, as the neighborhood definition becomes laxer, the strength of the “social effect” diminishes.
Finally, our work suggests some policy recommendations. In this sense, policy makers should take into account that there are geographical spillover effects affecting labor supply. In this vein, spatial areas, instead of single spatial units, should be the economic policy target when devising policy actions thought to improve problems related to the cyclical pattern in labor supply.