Differences in regional labour markets are still pronounced in Germany although the economic transformation of East Germany started almost two decades ago. GDP per capita in East Germany was 68% of the West German level in 2009. The unemployment rate in Easter Germany (13%) is nearly twice the rate in the Western part of the country.
But disparities are not only marked between West and East Germany, they exist also within the West Germany. For example Eichstätt, a county in the South of West Germany, shows an unemployment rate of 2.2% in 2009, whereas Bremerhaven in the North had 15,4 % unemployment that year.
Some theories imply that labour mobility should reduce such disparities. In contrast, other theories suggest that regional differences may well increase due to the interregional migration of workers. That´s why an investigation on the impact of labour mobility on regional disparities in Germany between 1995 and 2005 was conducted.
The survey findings suggest that there indeed exist significant effects of labour mobility on uneployment, whereas evidence with respect to regional wages is rather weak. Labour mobility seems to reduce regional disparities in unemployment. However, the results show that commuting is not so important for a reduction of labour market disparities in Germany. Significant effects of net commuting emerge only for the West German.