By Sven Wardenburg and Thomas Brenner.
The Working Paper #02.19 “The impact of place-based policies on perceived regional living conditions across German labor market regions. Examining the impacts on migration flows.” is now online and available here for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.
The paper analyzes the impact of the two major German regional development and redistribution policies, the municipal fiscal equalization scheme and the economic funds GRW, on perceived regional living conditions, measured through interregional migration between German labor market regions. Using a spatial vector-autoregressive panel model (SpVar), we find evidence that equalization transfers have a significant positive impact on perceived living conditions and contribute to the aim of regional equity. These effects are especially found for regions with low endogenous fiscal capacities. GRW funding reveals no significant effects on net migration rates in total, but short-term effects in rural regions.
By Jonathan Eberle.
The Working Paper #01.19 “Regional fiscal equalization in Germany – A simultaneous equation approach to assess the economic effects of fiscal policy” is now online and available here for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.
Regional fiscal equalization in Germany aims to reduce fiscal disparities by allocating financial resources to less promising regions in order to support the supply of public goods. This paper aims to analyse secondary economic effects of regional fiscal equalization on several economic in- and output variables. Additionally, the paper examines the potential regional characteristics to influence the transformation of fiscal inputs into economic outcomes. Lastly, I compare the effects of fiscal equalization to these of the major German structural funding program GRW. My findings reveal a significant positive effect of fiscal equalization on the regional employment rate. Moreover, the findings suggest different transmission channels of fiscal equalization in East and West Germany. Particularly, I find higher effects in right-wing CDU/CSU preferring regions on the employment, human capital and private-sector investment rate. Finally, while structural funding affects more economic variables significantly, the magnitude of the estimated economic responses of fiscal equalization compared to these of German structural funding are not statistically different.