Declining spatial transaction costs will affect patterns of urban specialization. The underlying hypothesis is that production locations of goods and services which require face-to-face contacts will continue to be concentrated in core cities of large agglomerations even in the Internet age while locations of standardized production activities with a high codified information content will spread to more peripheral locations. The paper provides empirical evidence on changes in employment specialization patterns of nine different types of German districts (ranging from core cities of agglomerations to low density rural districts) for the period 1976 to 2002. Obviously there is an increasing concentration of white collar employees relative to blue collar workers in core cities which even gains momentum in particular in the second half of the 1990s.