Causal relations between knowledge-intensive business services and regional employment growth

Causal relations between knowledge-intensive business services and regional employment growth. Regional Studies. 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 1999-2012. Adopting a recently developed technique, it uses a structural vector autoregressive model in which the causal directions between KIBS and other sectors are examined including various time lags. Results show 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 confirms the claim that KIBS can play a key role in regional policies.