Moritz Meister (p), Anne Meisiek, Annekatrin Niebuhr, Meike Rudolph

Hantian Sheng

This paper sheds light on the role of global value chain integration for local labour market outcomes in Germany during the COVID-19 pandemic until December 2021. Given the increasing dependence of the German economy on China, we focus on the bilateral trade relationship between the two countries. Specifically, we examine whether and to what extent global value chain linkages in general and with China in particular influenced the magnitude of the initial shock and the subsequent recovery of local labour markets. We show that the negative impact on local labour markets in the first part of the pandemic is specifically driven by global value chain linkages with China.
We use detailed spatio-temporal information on short-time work provided by the German Federal Employment Agency and link it to the OECD Inter-Country Input-Output Tables. To obtain regional information for global value chains, we weight the country information with the sector-specific employees in a given labour market region. To identify the effect of global value chain integration on regional short-time work, we use a difference-in-differences setup with the regionalised global value chain integration as continuous treatment. We also include an entropy balancing with a variety of controls and other spatio-temporal COVID-19 related information, which allowing us to identify a valid treatment effect.
We find that short-time work was used more intensively in regions with above-average global value chain integration with China. However, these effects seem to be temporary and disappear quickly in 2021. While GVC integration in general does not seem to have a significant effect, it is specifically global value chain linkages with China that seem to have a negative impact on regional labour markets in Germany. Our results also suggest that the effect is slightly higher for GVC-related imports than for exports, but the difference is not statistically significant.

Juan Cuadrado-Roura (p), Andrés Maroto

Moritz Meister

One of the most extended questions in the economic literature is why some regions recover better than others after crises. The recent COVID-19 socioeconomic crisis has highlighted this debate even more. Many variables have been introduced to justify the regional disparities and the economic resilience of regions. Among them, following and extending Cuadrado & Maroto (2016), this paper assesses the key role of the productive specialization to explain the different patterns of regional resilience. We analyze the case study of the Spanish economy, but results mught be easily extrapolated to other countries. We consider three rather different crisis: the first, held at mid-90s.; the 2nd: the Big Crisis started in 2008; and the last, the impact of Covid from the economic point of view. The analysis not only shows the different effects of such crisis from a regional point of view, but the regional capacity of reaction. Methodologically, regional and sectoral resilience indices are estimated and then, related to the regional specialization indices. Other effects of structural patterns are also analyzed using a shift-share analysis. Results show that, despite the differences both in causes, time duration, and regional effects of these three negative cycles, resilient regions display similar productive structures in all of them.
The main value added of this work is threefold. On one side, we extend the previous literature on regional resilience to economic crises comparing the results observed after the main three crises in the last decades. We compare these three different crises linking them with the role of productive specialization. Additionally, methodologically we introduce new sectoral and regional resilience indices for the Spanish economy. This kind of measures have only used previously for analyzing resilience among Chinese cities after Covid (Hu et al. 2022)

Canfei He, Hantian Sheng (p)

Juan R. Cuadrado-Roura

The outbreak of COVID-19 epidemic has had a prolonged impact on urban economic activities. Cities with better economic resilience are more capable of resisting the shock brought by the epidemic and realizing post-epidemic economic recovery. In such an uncertain environment, both governance capability and local industrial varieties have significant impacts on economic resilience. On the basis of previous works from evolutionary economic geography and institutional studies, this study uses nighttime light intensity as a proxy for economic resilience at prefecture-level and proposes that, at least in the short term, the effect of governance quality on economic resilience can be moderated by local industry varieties. The government’s intervention should follow the risk transmission mechanism of the regional industrial network. Besides, taking into account the institutional basis of China’s central-local relations, local governments have to firmly follow top-down policies issued by the state government to better enhance economic resilience under the epidemic.