Analysis and Forecasting of Regional Disparities of Income

The regional development of employment, the volume of employment and the regional revenues strongly depend on the economic environment, the demand and supply of work and the local wage structure. Regional disparities and bottlenecks of the labour market, the housing market, and the production sector can at least partly be substituted by commuting of parts of the labour force. As a consequence income is shifted from the place of work to the place of home. These indirect transfer effects on the one hand link regions economically together and may reduce on the other hand the economic disparities.

Empirical studies show that the regional gross wage payment (regional income) strongly correlates with the regional population numbers. Therefore, the population dynamics, namely the migration dynamics and the commuter flows are essential determinants of the regional revenues. The population dynamics is influenced by behavioural pattern and behavioural changes of individual agents. The resultant decision processes of the agents depend on a bundle of influencing factors related to the regional housing market, the labour market, a set of further regional characteristics such as cultural, ideological, political and behavioural differences, to take into account the spatial heterogeneity of regions.

The Institute for Employment Research (IAB), Nuremberg and STASA developed the IAB-STASA model to combine the two major analysis components for a common modelling framework, namely the master equation approach for modelling the demographic development and migration behaviour of the population and the interlinked structure of the labour market.

The employment data (Jahreszeitraummaterial) of the IAB provides an excellent data base for the investigation of regional labour market effects. Since for all employees with social security card the place of work, the place of residence, the duration of employment and the gross wages of the employee are reported. Via aggregation regional indicators such as regional income at the place of residence and the place of work, commuter flows, work place distribution, and wage distribution on different aggregation levels can be analysed.