Further research

International Trade and Interregional Inequality

Does international trade cause an increase in interregional inequality within countries? We run regressions for 180 countries that allow us to interpret our results as a causal effect of trade. We find evidence that there is no direct effect of trade which contrast to most of the literature. But there is an indirect effect via internal and external trade costs, in our model proxied by geographic conditions. Countries with very heterogeneous access of regions to each other and the world markets experience an increase in interregional inequality if trade increases. This is effect is not present in industrial countries. We take this as evidence that countries can overcome the geographical disadvantage by sufficient investment into infrastructure.

Hirte, G., C. Lessmann, A. Seidel (2020). International trade, geographic heterogeneity and interregional inequality European Economic Review

Age provision

Despite economist’s opinion, Germany does not discuss about a completely private financed system of retirement provision. By using a dynamic equilibrium model we show that people refuse a private system when they have the choice between private, partially private and a totally governmental financed retirement provision. Additionally, the results show that the current situation is essential for the acceptance by the population.

Hirte, G. (2003). The Political Feasibility of Privatizing Old-Age Insurance, Scottish Journal of Political Economy, 50(4), pp. 507-525.

We look at the retirement reforms of 1992 and 1999. In 1992, the age of retirement increased and in 1999 retirement payments were assimilated to demographic changes. The results show that the reform of 1992 led to increasing wealth but in 1999 to decreasing wealth.

Hirte, G. (2002). Welfare and Macroeconomic Effects of the German Pension Act 1992 and 1999 – A Dynamic CGE Study, German Economic Review, 3(1), pp. 81-106.

This article compares the goodness and the conclusions of the Computable General Equilibrium and Generational Accounting approach for the evaluation of financial reforms. The Generational Accounting methods is a shorter version of the Computable General Equilibrium method. The Generational Accounting method does not adequately represent the effects of the income tax reform. Contrarily, it works well for the youngest age group relating to the retirement provision reform. 

Börstinghaus, V. and G. Hirte (2001). General Equilibrium versus Generational Accounting, Finanzarchiv, 58(3), pp. 227-243.

The aging of the German population leads to challenges according to the retirement system. This article looks at former reforms and makes additional suggestions. We also look at the effect of the rising age of the median voter.

Hirte, G. (2005b). Demographischer Wandel und Rentenversicherung, Wissenschaftliche Zeitschrift der TU Dresden 54, No. 3-4, pp. 31-35.

The USA calculate the firm’s contribution payments to the unemployment insurance. Thereby they try to prevent that branches, that dismiss many people roll off their costs on other branches. We look if and how this is done in Germany, too.

Genosko, J., G. Hirte und R. Weber (1999). Quersubventionierung in der Arbeitslosenversicherung, Wirtschaftsdienst 79, S. 44-49.

Life satisfaction and interregional inequality

Interregional inequality is a measure for differences in the economic performance of regions and it reduces life satisfaction. The effect is robust to the inclusion of different determinants of life satisfaction.

Kalenborn, C. and Lessmann, C. (2014): Regional Income Inequality lowers Life Satisfaction: Evidence from OECD Countries, Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100561, Verein für Socialpolitik / German Economic Association.

Convergence

In the past convergence between countries and regions was considered to be given. We show that there is a club convergence.

Hirte, G. and A. Neumann (2008). Konvergenz von Regionen, Wissenschaftliche Zeitschrift der TU Dresden 57, Heft 3-4, pp. 31-35.

Corruption, democracy and press freedom

We look at democracy and press freedom as determinants of corruption. The results show that both are instruments in fighting corruption. A successful containment of corruption is only possible if press freedom as well as a certain degree of democracy are present.

Kalenborn, C., and C. Lessmann (2013): The Impact of Democracy and Press Freedom on Corruption: Conditionality Matters, Journal of Policy Modeling, 35(6), pp. 857-886.

Migration

How do people that stay in Saxony differ from people that want to leave Saxony? Social networks in other cities and life circumstances are important determinants for possible movers. Additionally, the subjective norm that western Germany is better than eastern Germany plays a role. Friends and Family in Saxony are binding determinants.

Kaplan, S., L. Grünwald and G. Hirte (2016): The effect of social networks and norms on the inter-regional migration intentions of knowledge-workers: The case of Saxony, Germany, Cities, 55, pp. 61-69.

Regional productivity and human capital

We look at the effect of the age pattern of human capital on regional productivity. We use a new definition of human capital by measuring how many people work in jobs that require a high education. We find that there are age dependent effects in Germany. The demographic change might even lead to an increase of regional productivity in the short run.

Brunow, S. und G. Hirte (2009). The Age Pattern of Human Capital and Regional Productivity: A Spatial Econometric Study on German Regions, Papers in Regional Science, 88(4), S. 799-823.

The different age structures of European regions determine regional per capita growth of regional output. Additionally, the age pattern of neighboring regions has an effect on growth. The highest effect does the age group from 30- to 44-years-old have.

Brunow, S. and G. Hirte (2006). Age Structure and Regional Economic Growth, Jahrbuch für Regionalwissenschaft, 26(1), pp. 3-23.