The determinants of interregional labour mobility in Germany

The paper focuses on the stylised fact of East to West migration in Germany. In section 2, a two-regions model explains how individuals decide whether to move to the West or not. The outcome depends on individual characteristics (skills and education), region specific variables (regional unemployment and wages) and sector specific variables(sectoral concentration and industrial features). These variables constitute arguments of a utility function: if an individual in the East would attain a higher utility working in the West, she moves, otherwise she stays. In section 3, I describe the data and in sections 4 to 5, I draw a picture of the regional and sectoral characteristics; then I analyse the individual characteristics of emigrants, immigrants and stayers. In section 5.3, I sum up and interpret the main descriptive findings. In section 6, a panel of logit estimate which matches the theoretical model and the data set; section 7 concludes the paper and identifies the regional, sectoral and individual characteristics differentiating the behaviour of immigrants from stayers. A negative relation between the probability to move and regional wages and unemployment is the main result described: emigrants, mostly unemployed, move to regions with low unemployment rates, and get a job at lower wages in a new local labour market.