Forecasting Regional Labour Markets in Germany An Evaluation of the Performance of Neural Network Analysis

The aim of the present paper is to forecast regional employment developments in the 327 West-German districts. Using a Neural Networks (NNs) methodology we try to identify the existence of underlying structural relationships between the input variables - data on regional and sectoral employment and wages - and the future development of employment at a district level. In order to offer reliable forecasts for the years 2000 and 2001, a variety of NN models has been developed and compared. The emerging results confirm the ability of NNs in capturing the complex data structures - in the training and test phases - and hence in 'extrapolating' useful information in a multi-regional context. Concerning the forecasting phases, our analysis highlights the necessity of carrying out further research experiments - by introducing additional economic background variables - in order to get more insight into the mechanism and structure of spatio-temporal employment data.

[1]  Francesco Camastra,et al.  Short-Term Load Forecasting Based on Correlation Dimension Estimation and Neural Nets , 1997, ICANN.

[2]  J. Borland,et al.  A wage curve for Australia , 2000 .

[3]  Manfred M. Fischer,et al.  Evaluating Neural Spatial Interaction Modelling by Bootstrapping , 2000 .

[4]  Antonio Fatás,et al.  Regional labor market dynamics in Europe , 1995 .

[5]  J Wagner.  German wage curves, 1979-1990 , 1994 .

[6]  The wage curve: convexity, kinks and composition effects , 1997 .

[7]  Paul Krugman,et al.  Space: The Final Frontier , 1998 .

[8]  P. Krugman.  Geography and Trade , 1992 .

[9]  Paul Krugman,et al.  WHAT'S NEW ABOUT THE NEW ECONOMIC GEOGRAPHY? , 1998 .

[10]  H. Bunzel,et al.  Panel Data and Structural Labour Market Models , 2000 .

[11]  Uwe Blien,et al.  Forecasting Regional Employment with the ENTROP Method , 2001 .

[12]  A. Oswald,et al.  The Wage Curve , 1989 .

[13]  G Reibnegger,et al.  Neural networks as a tool for utilizing laboratory information: comparison with linear discriminant analysis and with classification and regression trees. , 1991, Proceedings of the National Academy of Sciences of the United States of America.

[14]  C. A. Pissarides,et al.  Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages , 1985 .

[15]  M. Fischer,et al.  Some major issues in regional labour market analysis , 1989 .

[16]  H. Oosterbeek,et al.  Further evidence on the wage curve , 1992 .

[17]  David William Pearson,et al.  Applications of artificial neural networks , 1998 .

[18]  C. Shapiro,et al.  Equilibrium Unemployment as a Worker Discipline Device , 1984 .

[19]  Edward I. Altman,et al.  Corporate distress diagnosis: Comparisons using linear discriminant analysis and neural networks (the Italian experience) , 1994 .

[20]  Labour Market Policy in Germany: Job Placement, Unemployment Insurance and Active Labour Market Policy in Germany. IAB Labour Market Research Topics. , 2002 .

[21]  Andrew J. Oswald,et al.  An Introduction to the Wage Curve , 1995 .

[22]  Peter Nijkamp,et al.  Neural Networks in Transport Applications , 1998 .

[23]  Thiess Buettner.  The effect of unemployment, aggregate wages, and spatial contiguity on local wages: An investigation with German district level data , 1999 .

[24]  James L. McClelland,et al.  Parallel distributed processing: explorations in the microstructure of cognition, vol. 1: foundations , 1986 .

[25]  D. M. Titterington,et al.  Neural Networks: A Review from a Statistical Perspective , 1994 .

[26]  G. Rocheteau.  Equilibrium Unemployment and Wage Formation with Matching Frictions and Worker Moral Hazard , 2000 .

[27]  U. Blien,et al.  The German wage curve: evidence from the IAB employment sample , 1998 .

[28]  C. A. Pissarides,et al.  Equilibrium Unemployment Theory , 1990 .

[29]  Search theory and the wage curve , 2000 .

[30]  Chung-Ming Kuan,et al.  Forecasting exchange rates using feedforward and recurrent neural networks , 1992 .

[31]  J. Möller.  Income and price elasticities in different sectors of the economy: analysis of structural change for Germany, the UK and the USA , 2001 .