What Attracts Human Capital? Understanding the Skill Composition of Interregional Job Matches in Germany
39 Pages Posted: 22 Sep 2006 Last revised: 26 Aug 2008
Date Written: 2006
Abstract
By examining the destination choice patterns of heterogenous labor, this paper tries to explain the skill composition of internal job matching flows in Germany. Estimates from a nested logit model of destination choice suggest that spatial job matching patterns by high-skilled individuals are mainly driven by interregional income differentials, while interregional job matches by less-skilled individuals are much more affected by regional differentials in job opportunities. Regional differentials in non-pecuniary assets slightly contribute to spatial sorting processes in Germany. Such differences in destination choices by skill level are partly modified by different spatial patterns of job-to-job matches and job matches after unemployment. Simulating job matching patterns in a scenario of economic convergence between eastern and western Germany demonstrates that wage convergence is the most effective means of attracting human capital to eastern Germany.
Keywords: interregional job matches, destination choice, human capital
JEL Classification: R23, J61, C35
Suggested Citation: Suggested Citation
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