Chapter 11: What Drives Skill-biased Regional Employment Growth in West Germany?
Alexander Cordes Introduction Much is known about how the local economic structure shapes employment growth. Industrial clusters and other forms of sectoral composition are especially well-examined. In contrast, the skill dimension of employment growth is often reduced to human capital indicators either on the left- or the righthand side of the regression formula. Employment prospects of mid-skilled and unskilled workers are of less interest to the literature but in view of high longterm unemployment the skill dimension is increasingly important for labor market politicians. Furthermore, analyses of high-skilled employment growth neglects regional policy in peripheral regions lacking urban wage premiums or amenities. There are many factors related to the regional distribution of economic activity and density that lead to the expectation of skill-biased employment growth, meaning that the demand for high- and low-skilled employment or at least the skill level of the content of work varies with the region type. The fact that human capital is increasingly employed in urban areas is not new. However, high unemployment rates in cities lead to the question, where is less skilled labor better off during the development of the local and nationwide knowledge economy? We argue that exogenous developments, most prominently the ICT revolution, increase the possibilities for the firms to exploit cost advantages in more peripheral, rural regions – similar to what can be found at the international level where the transnational division of labor has increased substantially. The adverse effects of changes in the spatial division of labor on local employment first...
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