Regional Labour Markets in Germany: Statistical Analysis of Spatio-Temporal Disparities and Network Structures

Chapter 1 Introduction: Theoretical and Policy Aspects 1.1 Motivation for the Study In recent years researchers and policy makers have become increasingly interested in the study and interpretation of socio-economic processes at the meso- or regional level. At the present time, the region is often considered to be the ‘place of action’, where micro-behaviour and macro-outcomes come together. From a scientific point of view, what used to be the major focus of mainstream economists – the analysis of larger areas such as nations – now increasingly gives way to the study of regional-economic systems. Although empirical studies are carried out at different geographic/political scales, ranging, for example, from the larger US states to the smaller EU regions, down to the municipality level, regions are attractive units of analysis to researchers for a number of reasons. While nations – with some partial exceptions due to trade agreements or more complex relationships such as the EU – can be seen as relatively closed economic systems, regions can easily be interpreted as small open economic systems (see, for instance, Blanchard 1991). They are often administrative areas with a certain competence for economic policy and planning. As such, regions may show high levels of heterogeneity and interaction with each other, based on local characteristics, mobility of production factors, common institutions and regulations and lack of trade barriers. These factors make for fascinating research questions, which are not strictly related to economic issues, but also allow (or, one might say, require) us to delve into spatial/regional economics, by taking into account – in an interdisciplinary perspective – geography, land use planning and resource management, and so on. In this context, the recent development of extensive data sets allows the application of sophisticated approximation and forecasting techniques. From a policy viewpoint, it is straightforward to understand the implications of a deeper knowledge of regional economic processes. Most national governments implement increasingly local policies to answer the populations’ diverse needs and characteristics. Similar concerns can be imagined, for example, for large firms, with regard to the localized demand for the goods and services they produce (Armstrong and Taylor 2000).