Convergence of the skill composition across German regions

There is considerable variation in the skill composition of employment across cities and regions. The way how skill compositions evolve over time sheds light on the strength of concentration forces for high-skilled workers, such as localized increasing returns to human capital. In this paper I report robust evidence that regions with a large initial share of high-skilled workers had higher total employment growth in West Germany (1977–2002), but lower growth of high-skilled jobs. There has been a convergence of local skill compositions over time, on average and even within particular industries. These stylized facts for the German economy contrast available evidence from the US, where researchers have identified a divergence trend. My findings suggest that concentration forces in Germany are not strong enough to trigger a self-reinforcing spatial concentration of high-skilled workers. Some potential reasons for the differences with the US are also discussed.