The objectives of the paper are to examine the determinants of interregional labour migration for German regions using the data on gross flows of labour movements across regions. This is one of the few studies where data on labour migration is used. There also was a wage convergence after reunification between regions of East and West Germany and this to a certain extent provides an explanation for non-linear relationship between wage differences among regions and migration. As the study distinguishes the blue-collar and white-collar wage difference between regions, different relationships between migration and blue and white-collar worker's wage differences can be assessed. We also test the hypothesis whether highly skilled workers migrate to the regions where inequality is greater while less skilled workers tend to migrate to the regions where inequality is low.