Title and Abstract
Regional convergence at the county level: The role of commuters
Commuters spend a substantial portion of their income in a different place from where they earn it, thereby constituting an important channel for cross-regional economic dependencies. In this paper, we analyze their role for economic convergence. The commuter flows are inherently asymmetric which implies a stronger shock propagation from large economic centers to rural regions than in the opposite direction. This is in contrast to the symmetric network structure implied by the conventional geographic weights in spatial econometric models that are based on contiguity or geographical distance measures. Motivated on the grounds of the neoclassical growth model, extended for spatial spillover effects, we use German county-level data from 2002 to 2017 to estimate a panel data model that is dynamic both across time and space. Our results show that focusing on the global effects given by the regression coefficients can be misleading due to substantial heterogeneity at the local level. Commuter-based connectivity measures predict a much larger and far-reaching impact of economic shocks originating in densely populated lighthouse regions than what would be expected based on geographic connectivity, and vice versa for sparsely populated areas. This has important policy consequences for regional development as it suggests that the spatial multiplier for investment in already prospering regions is higher than for directly targeting deprived regions, at the potential cost of reinforcing existing inequalities.