This paper studies the causal relations between regional employment growth in Knowledge-Intensive Business Services (KIBS) and overall regional employment growth using German labour-market data for the period 1999-2012. Adopting a recently developed technique, we are able to estimate a structural vector autoregressive model in which the causal directions between KIBS and other sectors are examined including various time lags. One main finding holds that although regional growth has a negative short-term effect on KIBS, KIBS growth has a long-term positive effect on the whole regional economy. This result confirms the claim that KIBS can play a key role in regional policies. Distinguishing between financial and non-financial KIBS, we find that financial KIBS have a procyclical effect on regional growth underlining the potential de-stabilizing effect of a large financial sector.
|Place of Publication||Maastricht|
|Publisher||Maastricht University, Graduate School of Business and Economics|
|Number of pages||30|
|Publication status||Published - 1 Jan 2015|
|Series||GSBE Research Memoranda|
Brenner, T., Capasso, M., Duschl, M., Frenken, K., & Treibich, T. G. (2015). Causal relations between knowledge-intensive business services and regional employment growth. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 029