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Regional Labour Markets

Updating the Employment Forecast 2000 (1995- 1996)

In Germany regional economic development is a policy area jointly addressed by Federal and Länder governments. For the most recent revision of policy regions by the Intergovernmental Commission 'Improvement of Regional Economic Structure' the regional employment forecast of the Chair of Economics and Regional Economic Policy for the year 2000 (see 'Regional Employment Forecast 2000') was reviewed and updated. For the first time also the labour market regions of the new Länder were included. Employment is one of four indicators by which the Planning Committee of the Commission decides on the eligibility of regions for receiving aid. The other three are unemployment, income and infrastructure. The new employment forecast from 1994 to 2002 is an update of the forecast for 2000. It is based on regional time series analyses from 1976 to 1994 controlled and adjusted by detailed regional analyses and plausibility checks. According to the forecast the spatial deglomeration of employment will increase in speed. The acceleration is caused to a large part by the less favourable prospects of the agglomerations in southern Germany such as Stuttgart or Rhine-Neckar. Even Frankfurt or Munich face only average rates of change. In northern Germany a wide band of regions with above-average growth potential stretches from Emsland in the West through Osnabrück and the hinterlands of Bremen and Hamburg to Lüneburg in the East. These regions have been able to stabilise their favourable development pf recent years. The accuracy of the forecasts proved to be good compared with other forecasting methods. The ex-post validation of the old forecast for the year 2000 for the period from 1992 to 1994 showed a great correspondence between the predicted and actual rates of change. Compared with the previous forecast for 1995 the number and magnitude of errors has even decreased. The forecasts to date have been restricted to the old Länder. Currently the database is being expanded so that in a few years time series analyses and (cautious) forecasts for the new Länder will be possible.

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