Picture map of Europe with pins indicating European capital cities

Open Access research with a European policy impact...

The Strathprints institutional repository is a digital archive of University of Strathclyde's Open Access research outputs. Strathprints provides access to thousands of Open Access research papers by Strathclyde researchers, including by researchers from the European Policies Research Centre (EPRC).

EPRC is a leading institute in Europe for comparative research on public policy, with a particular focus on regional development policies. Spanning 30 European countries, EPRC research programmes have a strong emphasis on applied research and knowledge exchange, including the provision of policy advice to EU institutions and national and sub-national government authorities throughout Europe.

Explore research outputs by the European Policies Research Centre...

Prediction using panel data regression with spatial random effects

Fingleton, B. (2009) Prediction using panel data regression with spatial random effects. International Regional Science Review, 32. pp. 173-194. ISSN 0160-0176

Full text not available in this repository. Request a copy from the Strathclyde author

Abstract

This article considers some of the issues and difficulties relating to the use of spatial panel data regression in prediction, illustrated by the effects of mass immigration on wages and income levels in local authority areas of Great Britain. Motivated by contemporary urban economics theory, and using recent advances in spatial econometrics, the panel regression has wages dependent on employment density and the efficiency of the labor force. There are two types of spatial interaction, a spatial lag of wages and an autoregressive process for error components. The estimates suggest that increased employment densities will increase wage levels, but wages may fall if migrants are underqualified. This uncertainty highlights the fact that ex ante forecasting should be used with great caution as a basis for policy decisions