ifo Dresden: New Government Agencies Bring More Jobs to Structurally Weak German Regions But Hardly Any Inward Migration

Establishing government agencies in structurally weak regions does little to revitalize those regions: it rarely attracts new workers who could provide additional economic stimulus. However, it does create jobs for the population already living in a region. Relocating an agency that requires highly skilled employees and professionals may impact its ability to get work done.

“Structurally weak regions are often not attractive enough to tempt new workers to move there. At the same time, they often lack highly qualified workers,” says Joachim Ragnitz from the ifo Institute’s Dresden Branch, explaining the study’s findings. The research shows that agency employees sometimes live in nearby major cities or commute from their agency’s previous location. When this is the case, the hoped-for economic stimulus in the target regions fails to materialize.

“To make a success of relocating an agency, you have to improve the new location’s ‘soft’ factors,” Ragnitz says. These include employment opportunities for family members, permanent employment contracts, and good transport and broadband connections. It is also important for the location to offer good educational institutions, a variety of recreational opportunities, and a suitable range of housing.

The study results were compiled by the ifo Institute on behalf of Germany’s Federal Institute for Research on Building, Urban Affairs, and Spatial Development (BBSR). A summary is published today under the title “Experience with Locating Government Agencies in Structurally Weak Regions” (authors: Xenia Frei and Remo Nitschke) in issue 03/2022 of the journal ifo Dresden berichtet (in German only).