Comparative Analysis of Dynamics of Employment in Western and Eastern States of Germany

The process of German reunification has led to the substantial socio-economic differentiation of the western and eastern states of Germany. The labour market has a special place in the configuration of regional disparities. The unemployment rate in the new states still considerably exceeds the West German level, and the labour market in eastern regions may be characterized as less stable. In order to overcome the discrepancies, reforms have been carried out that have liberalized the labour market. There have also been a lot of projects dedicated to economic development of structurally weak states as well as a number of employment stimulation programs. The digitalization of German economy is likely to create new prospective for German regions, but some industries will inevitably face new challenges. This paper is devoted to the study of employment dynamics in the old and new states of Germany and evaluation of the effectiveness of some labour market development programs. For these purposes, a regression analysis was carried out, which made it possible to evaluate the effectiveness of ongoing regional development programs. A cluster analysis helped classify German regions according to some key labour market indicators. As a result, we came to the conclusion that remaining economic disparities between the old and new lands of Germany are statistically significant, whereas some programs aimed at mitigating these discrepancies have little effect on the situation as a whole.