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Mercur-Research | Graduiertenkollegs 2484 "Regional Disparities and Economic Policy"

Graduiertenkollegs 2484 "Regional Disparities and Economic Policy"

Regional disparities are pronounced and persistent. Even at fine geographical grids, locations differ markedly with regard to per-capita income, land rents, firm productivity, skill levels of workers or innovation activity. This heterogeneity crucially depends on economic density, which is positively associated with these outcome variables and unevenly distributed across space. Recently, the United Nations has announced that the majority of the world’s population now lives in cities – for the first time in human history; and this trend is expected to continue. The United Nations (2014) estimates an urban population share of two thirds in 2050. Current regional disparities are thus likely to increase in the future. Even if agglomeration raises productivity and thus income on average, it is questionable whether everybody will be able to benefit from these aggregate gains. A lot depends on mobility between regions and industries. The research training group is designed to equip students with both the required methodological skills and the state of knowledge in the field of regional and urban economics to improve our understanding of economic mechanisms at the regional level and provide policy advice. The literature has identified a number of agglomeration forces as drivers of urbanization. Trade in goods renders denser places more attractive as both firms and households benefit from the proximity of suppliers. If labor is mobile, lowering trade frictions fosters agglomeration of economic activity, often at the expense of remote (rural) regions. The effects of market integration and global shocks thus diffuse heterogeneously into regions producing winners and losers (see, e.g., Autor, Dorn, Hanson, 2013, Dauth, Findeisen, Südekum, 2014). Recent elections document the anxiety many voters feel in response to immigration or globalization. Public debates about policy responses are prominent in many countries. Not only in Europe, populist parties and politicians have experienced increasing support of voters, and voices supporting mercantilist positions and protectionism have become stronger. Although there is a large literature stressing aggregate welfare gains of market integration – while acknowledging the distributional implications – it is essential to better understand the regional aspects of this process. The design of public policies requires sound knowledge of economic mechanisms at the local level as they may differ importantly in a number of relevant ways from mechanisms at the aggregate level. For example, agglomeration economies play a central role at the local level changing implications for public policies (e.g. taxation). People are more mobile as they can commute between districts, but at the same time, the degree of interregional or even international mobility differs between skilled and unskilled workers. Traditionally, regional economics has addressed questions related to the uneven distribution of economic activity and a number of established theories rationalize spatial equilibria and their persistence (e.g. Krugman, 1991). The developments in recent years point towards the need for a quantitative assessment – both structural and reduced-form – and an expansion of the regional view to other fields in economics. To provide a few examples, labor economists study how shocks dissipate into local labor markets, macroeconomists apply dynamic modelling to understand the persistence in unemployment differentials between neighboring municipalities, and public economists examine the link between local public good provision as well as local taxes and the migration decision of firms and households. Furthermore, methods that are established in one field become more common in other fields that have so far relied on a different set of approaches. For example, heterogeneous-agents-models can be merged with recent developments concerning structural models in regional economics (for the latter, see Allen and Arkolakis, 2014, Redding, 2016, Monte, Redding, Rossi-Hansberg, 2016). Approaches from the literature on business cycles and frictional labor markets can be adapted to gain a better understanding of regional labor markets. Or studying how the provision of local public goods, taxation, and the inter-jurisdictional distribution of income affects location decisions of firms and households adds a spatial dimension to questions of public economics, which could potentially be addressed using structural general-equilibrium approaches in a currently reduced-form dominated literature. The RTG establishes a unique group of researchers from different fields, such as public economics, health economics, macroeconomics, labor economics, and international and regional economics, who all have a strong interest in regional aspects of their respective field of expertise and who are equipped with a rich set of highly relevant methodological skills. Importantly, no single university in the area would be able to provide this expertise alone, so there is substantial value added by the formation of the RTG. The heterogeneity of both topical and methodological backgrounds promises innovative and relevant insights that enable the design of better public policies. In the following, we highlight several topics within the broader theme of our research agenda to describe more specifically potential research papers and dissertation projects.


Prof. Dr. Tobias Seidel, Universität Duisburg-Essen, Lehrstuhl für Volkswirtschaftslehre

Förderlinie: Sprint

Gesamtfördersumme:  17.752,80 €


Prof. Dr. Tobias Seidel
Universität Duisburg-Essen
Lehrstuhl für Volkswirtschaftslehre
Lotharstraße 65
47057 Essen