Determinants of business and personal services: Evidence from West-German regions

In the Employment Guidelines for the year 2000, the European Commission stressed the need to develop a policy framework in order to fully exploit the employment potential of the service sector. This concern is especially related to Germany for its massive service gap compared to Anglo-Saxon (United States, United Kingdom) and Scandinavian countries (Denmark, Sweden) in general, and in personal and business services in particular. The focus of this study is to understand the theoretical basis of the dynamic of employment growth in services and to identify especially the determinants that foster the growth of business services and the creation of jobs in personal services in Germany. The paper starts therefore with an extensive literature review on service employment with a particular focus on business and personal services and on the German debate.