Ratio Working Paper No. 257: Firm’s Evaluation of Location Quality: Evidence from East Germany

PublikationWorking paper
Alexander Eickelpasch, Andreas Stephan, Arbetsmarknad, Ekonomisk geografi, Företagsekonomi, Georg Hirte, Infrastruktur
Ratio Working Paper No. 257
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Our study provides evidence for rms’ evaluation of location quality. We use a 2004 survey of 6,000 East German rms that contained questions on the importance and assessment of 15 dierent location factors ranging from closeness to customers and suppliers, transport infrastructure, and proximity to research institutions and universities, as well as questions about the local nancial institutions and region’s image”. The results show (1) a great deal of heterogeneity in terms of which rm- or regional-level characteristics are important in the evaluation of a specic location factor, (2) that the model’s explanatory power is, overall, low and thus neither location characteristics nor internal factors are fully re ected in the perceptions, (3) that a rm’s business situation and whether a location factor is considered important have explanatory power for perception. One policy-relevant conclusion that we derive from these ndings is that location policy should consider rms’ perception of a specic location in addition to improving the actual attributes of that location.

Eickelpasch, A., Hirte, G. & Stephan, A. (2015). Firm’s Evaluation of Location Quality: Evidence from East Germany. Ratio Working Paper No. 257.

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Working paperPublikation
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Working paperPublikation
Nyström, K.


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Ratio Working Paper


This paper contributes to knowledge about regional resilience to displacement and examines the extent to which the characteristics of the i) regional closures, ii) individuals in a region, iii) regional industry, iv) regional economy and v) regional attractiveness influence the re-employment of displaced employees. The results indicate that regions where the average size of establishment closures is large or the regional displacement rate is high exhibit increased resilience in terms of re-employing displaced employees in the same region. Unrelated and related industrial variety are positively related to resilience to displacement in regions with low re-employment capacities, whereas there is some evidence that regional attractiveness is positively related to resilience in regions with a good ability to re-employ displaced employees.
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Simultaneous-equations analysis in regional science and economic geography
Mitze, T. & Stephan, A.



Extract: The specification and estimation of simultaneous-equations models (henceforth SEMs) has a long tradition in economics. Although SEMs were originally established in the field of macroeconomics, various applications can also be found in applied regional science and economic geography. Among many others, one prominent example is the Carlino and Mills (1987) study on the simultaneous evolution of regional population and employment densities, which gave rise to the famous ‘chicken-or-egg’ quest for causality within the framework of regional adjustment models. And indeed, specifying and estimating an SEM has much to do with getting causal relationships right. This is why applied economists and econometricians generally valorize the SEM approach for its capacity to formulate an explicit structural model with more than just one endogenous variable and the statistical power to control for correlated residuals among the individual equations of the system. While the first argument is of crucial importance for the consistency of the estimated model parameters, the second point is mainly concerned with the notion of estimation efficiency.

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