Sectoral heterogeneity, accessibility and population-employment dynamics in Dutch cities

Abstract

In the Netherlands, the diminishing accessibility of locations of consumers, producers and services potentially hampers economic growth. Reducing congestion is therefore one of the pivotal challenges for Dutch policymakers. In this paper we analyze population–employment dynamics in the Netherlands and concurrently decompose total employment into four broad sectors: manufacturing, distribution, business service and personal service activities. We explicitly allow for inter-sectoral relations to capture employment dynamics more accurately. We introduce a model in which endogeneity and spatial autocorrelation are dealt with by a generalized spatial three stage least squares (3SLS) estimator. Our empirical results suggest that population growth primarily causes the consumer service sector to grow. Employment growth in industrial activities and business services are not decisively affected by population growth. Moreover, the inter-sectoral relations appear more important than between employment and population growth itself. Our findings indicate that the existing magnitude and direction of consumer and business trips will be persistent over time, and potentially be even more pronounced in the future.