10
4. Regional labour markets and data
Threshold estimates are based on a sample of regional labour markets. As Eckey, Horn
and Klemmer (1990) have pointed out, regions defined on behavioural settings are gen-
erally preferable over administrative units, as the latter may distort the economic condi-
tions. Regional labour markets are defined on the basis of job commuters and corre-
spond to travel-to-work areas.
Starting from 440 administrative districts (Kreise), Eckey (2001) constructed 180 re-
gional labour markets of which 133 are located in the western and 47 in the eastern part
of Germany. The three overlapping regions, i.e. regions that consist of both eastern and
western districts, are mainly build from West German districts. Therefore, they are
counted as West German regions.
While data on GDP and employment are available for administrative districts, the num-
ber of unemployed refer to labour market agencies (Dienststellenbezirke). Both classifi-
cations do not match with the borders of regional labour markets. Hence the data must
be aggregated. On the average a regional labour market consists of 2.4 districts and 4.8
agencies.
The analysis is based on annual data. Nominal GDP and employed persons are obtained
from the Volkswirtschaftliche Gesamtrechnung der Lander published by the Statistical
state office of Baden-Württemberg. GDP is deflated by the regional GDP price indices,
which are available at the state level. Growth rates of real GDP and employment are
calculated in the continuous compounding form. Data on unemployment are taken from
the Amtliche Nachrichten der Bundesanstalt für Arbeit which are edited by the Federal
Employment Services.
The sample runs from 1992 to 2000 and covers the recent experience of the German
unification. Due to instabilities of the Verdoorn and Okun coefficients reported in most
studies, reliable estimates of the thresholds demand a rather short time series dimension.
As GDP is not available for 1993 on the district level, it has been interpolated by match-
ing it with GDP on state level.