Regional Unemployment and Mobility in Germany - An Analysis at District Level

Abstract:
This paper looks at the influence of regional unemployment rates on regional job mobility and firm switches. For that purpose we use data from the German Life History Study that includes detailed individual information and regional information about the place of work. This individual level data set is combined with unemployment rates at the level of German Kreise from the Federal Employment Offices. While many earlier studies did not find a significant impact of regional unemployment rates on mobility, we show that the reason for job switches has to be taken into account. When we do this, we find that regional unemployment rates influence job flows in two directions: voluntary switches decrease and involuntary switches increase. It seems that regional mobility is considered especially often if the alternative is unemployment. We therefore show that regional labour mobility contributes to equalizing regional unemployment rates in Germany, though to a relatively small amount.