Project

The project "Segregation and regional mobility” documents the extent and intertemporal development of regional inequality in Germany and provides causal evidence on the causes and consequences of local segregation. At the core of these analyses is a newly compiled comprehensive small-scale dataset. The project was undertaken by the RWI – Leibniz Institute for Economic Research in collaboration with the Institute for Employment Research (IAB), the Düsseldorf Institute for Competition Economics (DICE), and the University Pompeu Fabra in Barcelona. Regional inequality has generated policy concerns not only in Germany. This project aims to quantify regional inequality in Germany and to analyze its drivers and consequences. We built several small-scale databases, enabling us to go beyond the administrative levels of cities or districts and zoom into small spatial units. We created a unique longitudinal dataset with fine regional information based on grid cells (1x1km). Structural information about the local population and housing price indices (RWI-GEO-GRID and RWI-GEO-RED/X) is combined with detailed employment biographies of the German workforce (GridAB). The data are enhanced by election results for 2017 and infrastructural information. For the first time, a complete set of variables is available to analyse the causes and consequences of regional inequality using state-of-the-art empirical methods. The GridAB dataset will be made available to the scientific community through the research data centre (FDZ) of the IAB. All other datasets are already made available or will be made available through the FDZ Ruhr. The project results reveal that there is substantial segregation with respect to employment, wages and skills within cities. Further, we show that earnings inequality has developed differently between and within regions in Germany. Going beyond this descriptive work, different causal analyses focus on different questions. We analyze the driving factors of segregation against the background of the refugee inflow. Using a novel spatial equilibrium model, we show that the refugee inflows between 2014 and 2017 led to partial displacement effects in local labor markets and increases in housing prices, especially in localities with inelastic housing supply. We also provide evidence that these refugee inflows decrease the shares of far-right voting in West German urban neighborhoods. Additionally to the driving factors of segregation, we also analyse the consequences of segregation for the housing and the labour market. Regarding the housing market, we show how the unequal distribution of noise pollution affects housing prices. Further, we test if rentcontrol policies alleviate segregation forces. Regarding the labour market we analyse whether local income inequality influences the labour market integration of refugees. Further, we study whether local female employment rates foster the labour market integration of female refugees. Finally, we test whether neighborhood unemployment foster regional job mobility?

Project start:
01. April 2019

Project end:
31. December 2022

Project management:
Dr. Sandra Schaffner

Project staff:
Dr. Philipp Breidenbach, Lea Eilers, Arijit Ghosh, Dr. Patrick Thiel, Dr. Lukas Hörnig, Prof. Dr. Fabian T. Dehos

Project partners:
Institut für Arbeitsmarkt- und Berufsforschung, Düsseldorf Institute for Competition Economics, Universitat Pompeu Fabra

Funding:
Leibniz-Gemeinschaft Geschäftsstelle