The first phase of the project RegioEcon was devoted to the interplay between individual factors, social environment and regional economic characteristics for labour market outcomes and internal worker mobility. Among the factors describing social environment we capture social networks of the family, the circle of friends and possibilities for civic engagement.  Regional economic factors are characterised by the population density, GDP, regional unemployment rates, migration as well as the stock of vacancies, market tightness and housing availability. Most of the analysis was conducted for local labour markets or counties (NUTS-3). Another goal of the project was to evaluate the impact of policy changes (e.g. federal minimum wage) for regional inequality and individual economic outcomes. More specifically, research of the RegioEcon team in the first funding phase can be divided into the following areas:

I. Job Search and Labour Market Outcomes

The main RegioEcon study in this area is Afonina, Zaharieva (2024) “How Did You Find Your Job? Effects of the Job Search Channels for Labour Market Outcomes in Germany”. This study is based on the SOEP data augmented with information from INKAR. It investigates the selection of workers into different search channels, distinguishing between referral hiring and direct individual applications for advertised positions. The study finds that workers relying on job referrals from their social networks are, on average, more likely to work part-time and in smaller firms. Moreover, their educational attainment is lower, and occupational mismatch is more common among this group. Further, the article exploits the unique combination of information about the type of social contact providing a referral, workers’ cognitive abilities captured by the symbol digit test and starting wages in new employment relationships. It finds that workers entering jobs via referrals from former colleagues perform better in the ability test, which comes along with a wage premium in the new job. In contrast, referrals from friends or family are associated with a substantial wage penalty.

II. Spatial worker mobility and reallocation

The key RegioEcon study in this area is Rickmeier (2023) “Navigating Regional Barriers to Job Mobility: The Role of Opportunity Structures in Individual Job-to-Job Transitions”. This research is based on a combination of SOEP, INKAR and vacancy data of the Federal Employment Agency (BA) and investigates the effect of regional opportunity structures on job-to-job transitions and geographical reallocation. This study contributes to the understanding of the regional contexts in which individual job mobility occurs. The results show that job changes are negatively associated with labour market tightness, indicating that workers are less likely to change jobs in regions with a high ratio of job vacancies to unemployed workers. This result could be driven by better outside opportunities of workers and higher matching quality. Fewer job-to-job transitions in labour markets with higher market tightness suggests that regional factors such as job availability and security play an important role in shaping job mobility, and that policies aimed at promoting job transitions may need to consider the specificities of local labour markets.

III. Immigration, Social Networks and Occupational Mismatch

The key RegioEcon study in this area is Alaverdyan and Zaharieva (2022) “Immigration, Social Networks and Occupational Mismatch”. It investigates the link between the job search channels used to find employment and the probability of occupational mismatch. The focus of this study is on differences between native and immigrant workers. Using SOEP data it documents that referral hiring more often generates new jobs in the group of immigrant workers compared to natives. At the same time, referral hiring is associated with the highest rate of occupational mismatch among all channels in Germany. This empirical evidence is combined together to develop a search and matching model with two ethnic groups, two search channels and two occupations. The model predicts that higher rates of referral hiring produce more frequent occupational mismatch of the immigrant population compared to natives. This prediction and the underlying mechanism of the model are confirmed by the by the empirical analysis.

IV. Technological change and industry dynamics

The key RegioEcon study in this area is  Colombo, Dawid, Harting (2024), “R&D Location in Dynamic Industry Environments”. It investigates firms’ optimal R&D location strategies in a dynamic industry model with competition in product quality. In light of potential future inwards and outwards spillovers firms make their location choices relying on heuristic strategies that are based on the expected present values associated with alternative location patterns. Using a simulation analysis, this paper shows how the strategies of innovators and imitators differ and how they depend on whether firms operate in strongly or weakly innovative industry environments. In addition, this study also characterizes how firms’ location choices should account for the innovativeness of the competitors active in a location.

Selected Publications:

• • Alaverdyan, S., & Zaharieva, A. (2022). Immigration, social networks and occupational mismatch. Economic Modelling 114: 105936. DOI: 10.1016/j.econmod.2022.105936.
  • Rickmeier, K. (2023). Navigating Regional Barriers to Job Mobility: The Role of Opportunity Structures in Individual Job-to-Job Transitions. Social Sciences 12(5): 295. DOI: 10.3390/socsci12050295.
  • Colombo, L., Dawid, H., & Harting, P. (2024). R&D location in dynamic industry environments. Journal of Economic Geography 24(1): 41–62. DOI:  10.1093/jeg/lbad024.