The Bonn Jobs Miracle

Will the move of Germany’s capital from Bonn to Berlin have negative effects on the country’s job market?

January 12, 2000

Will the move of Germany's capital from Bonn to Berlin have negative effects on the country's job market?

When the decision was made to move Germany’s federal government to Berlin, the people of Bonn were collectively depressed. How could the city have any kind of viable economic future after its major employer — the federal government — packed up and left town?

Almost immediately, doomsayers began comparing Bonn’s future to that of the “rust belt” in the United States. There, as employers abandoned antiquated factories during the 1970s and 80s, the region was left with years of chronic unemployment, outmigration, and economic decline.

Like the rust belt, Bonn seemingly had little else to fall back on. Before it was made the capital in 1949, its source of economic vitality was as a retirement community for former high-ranking Prussian civil servants.

But only a few months after the government left town, it has turned out that Bonn may in fact be the beacon of a German “jobs miracle.” The departure of the once-dominant public sector has actually had an invigorating effect on the city’s employment scene.

Now, following the lead of Bonn-based Deutsche Telekom, one of the world’s largest telecommunications firms, smaller telecom companies are eagerly tapping a job market once monopolized by the government.

In fact, should the politicians who now live and work in Berlin have a chance to return to the old capital, they might learn a valuable lesson. Just look what effect the government has on unemployment by leaving the labor market to the private sector.