Dynamic Clusters

Globalization has had an enormous impact on traditional industrial structures. It seems almost the case that everything is everywhere the same. And yet, in reality, some regions in a single industrialized country enjoy rapid economic growth while others are downsizing or stagnating. Thus there must be some remaining regional competitive advantages—even in the “Age of Globalization.” This paper engages in a quest to discover what these new “locational” factors might be and how and why they are necessary in creating a dynamic cluster of regional growth. In doing so, we try to link agglomeration advantages of the new economic geography with competitive advantages of Porter’s cluster theory. But we also go beyond these approaches and add further regional growth factors such as creativity or diversity. Using data that paint a comprehensive picture of industry and regional development in Germany we try to find empirical evidence for our approach. A case study from the automobile industry – one of the leading industries in Germany – completes our picture of dynamic clusters.Cluster, Regional Growth, Innovation, Creativity

The Long Wind of Change. Educational Impacts on Entrepreneurial Intentions

In this paper, we assess educational factors which might have an impact on entrepreneurship. We analyze influences on the entrepreneurial intentions of German university students and find that pre-university education significantly affects their desire to become an entrepreneur. Using the recent German history of separation and reunification as quasi-natural experiment, we focus on the early formation of entrepreneurial endowments during adolescence and investigate whether pre-university education affects university students’ entrepreneurial intentions. Particularly, we analyze the impact of socialization and schooling under the socialist regime of the former German Democratic Republic (GDR) which might hamper entrepreneurship. Our results show that socialist education has a negative effect on the entrepreneurial intentions of students in reunified Germany who were brought up in the GDR. When analyzing the subsample of East German students who were partly educated in the FRG after reunification in 1990, we find that some years of education in the liberal market system increase the entrepreneurial intentions of students born in the GDR. We focus on university students, since universities are seen as potential “breeding ground†for innovative entrepreneurship as described by Schumpeter (1912). Here we assume according to Falck et al. (2009) that entrepreneurial intentions are a good predictor for future entrepreneurship. We use data from a regularly repeated survey among university students in Germany. Our analysis rests on the three waves conducted after reunification at 23 universities, in (the former socialist) East as well as in West Germany. Generally, German students have significantly lower entrepreneurial intentions when they were educated in the GDR. We further restrict our sample to mobile students at West German universities and still find a negative effect of socialist education. This effect is also robust to the inclusion of a rich set of control variables concerning the students’ family background, job experience as well as further measures for their educational training. Overall, being educated in the socialist GDR decreases the likelihood of having entrepreneurial intentions between around 4 and 7 percentage points Thus our findings suggest that adolescents’ education might act as effective measure to stimulate entrepreneurship.

Identity and Entrepreneurship

We incorporate the concept of social identity into a stylized model of occupational choice and analyze whether an individual’s identity affects his or her decision to become an entrepreneur. We argue that an entrepreneurial identity results from an individual’s socialization. This could be parental influence but, as argued in this paper, also peer influence. To test this empirically, we apply instrumental variable approaches to PISA data. Our findings suggest that having an entrepreneurial peer group has a positive effect on an individual’s entrepreneurial intentions. Regarding entrepreneurial parents, we find a positive effect that cannot only be explained by ownership succession of the family business.occupational choice, entrepreneurship, identity, peer effects

The Evils of Forced Migration: Do Integration Policies Alleviate Migrants' Economic Situations?

Armed conflicts, natural disasters and infrastructure projects continue to force millions into migration. This is especially true for developing countries. After World War II, about 8 million ethnic Germans experienced a similar situation when forced to leave their homelands and settle within the new borders of West Germany. Subsequently, a law was introduced to foster their labor market integration. We evaluate the success of this law using unique retrospective individual-level panel data. We find that the law improved expellees' overall situation but failed to restore their pre-war occupation status. This holds implications for the design of integration policies today.forced migration, integration policy, difference-in-differences, Germany

The Impact of Continuous Training on a Firm’s Innovations

Keeping up with rapid technological change necessitates constant innovation. Successful innovation depends on both incumbent workers’ knowledge, based on experience, and knowledge about the latest technologies, along with the skills needed to implement them. Both of these knowledge-based elements of innovation can be attained through moderate labor force turnover in combination with continuous training. Based on German micro data, we find empirical evidence in support of training leading to innovation within a multivariate regression framework. However, when instrumenting training by the existence of a union’s contract or a works council this impact disappears.innovation, training, unions, works councils

It’s All in Marshall: The Impact of External Economies on Regional Dynamics

Marshall's student Pigou noted: “It’s all in Marshall.” From a static point of view, this seems rather bold in a constantly changing world. However, this statement becomes more plausible in a dynamic context, where principles are subject to change. Indeed, over time, Marshall's concept of external economies gained fresh perspective as new concepts of regional characteristics and agglomeration evolved. This paper focuses on the impact of region and industry on dynamics and growth, distinguishing between industrial districts, industrial agglomerations and urban agglomerations. Based on these three types, we use a comprehensive large dataset on German regions to test the following: (1) these regions can be characterized by given location variables describing geographic location, firm structure, and surrounding location factors and (2) every region's locational variables affects its potential for dynamics.regional and urban development, agglomeration, industrial districts, location factors, external economies

Demography and Innovative Entrepreneurship

Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual’s decision to start a business is determined by his or her age and, therefore, that a change in a region’s age distribution affects the expected number of startups in the region. Using German regional data, we estimate a count-data model and find that the expected number of startups is positively influenced by the fraction of individuals of working age—20–64 years old. A more detailed analysis of the working-age distribution suggests that startups in knowledge-based (high-tech) manufacturing industries are affected by changes in this distribution whereas firms in other industries are not. In particular, increases in the fraction of individuals in the 20–30 age range and individuals in the 40–50 age range have a positive effect on the number of high-tech startups.demography, age distribution, entrepreneurship, innovation, region

Eigenverantwortliche Individuen und Pro-Aktive Unternehmen

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Dialects, Cultural Identity, and Economic Exchange

We investigate whether time-persistent cultural borders impede economic exchange across regions of the same country. To measure cultural differences we evaluate, for the first time in economics, linguistic micro-data about phonological and grammatical features of German dialects. These data are taken from a unique linguistic survey conducted between 1879 and 1888 in 45,000 schools. Matching this information to 439 current German regions, we construct a dialect similarity matrix. Using a gravity analysis, we show that current cross-regional migration is positively affected by historical dialect similarity. This suggests that cultural identities formed in the past still influence economic exchange today.dialects, language, culture, internal migration, gravity, Germany