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Firm wage differentiation in Eastern Germany

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Author Info

  • Bernd Görzig
  • Martin Gornig
  • Axel Werwatz

Abstract

In Eastern Germany, wage differentiation between firms has clearly grown, parallel to individual wage differentials. Nevertheless, the wage spread between firms is still much less than in Western Germany. In this paper, a non-parametric decomposition is used to analyze the difference between the wages spread in the two parts of Germany. Only part of the difference can be explained by different economic structures in Eastern Germany. By far, the greater part of the difference in the wage spread between firms in the two parts of the country is due to the fact that differences in wages paid by firms of the same type in Eastern Germany are much less than those of their counterparts in Western Germany. A striking result of the analysis is that the gap in the wage variance between Eastern and Western Germany is increasing. Copyright (c) 2008 The Authors.

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Bibliographic Info

Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 16 (2008)
Issue (Month): 2 (04)
Pages: 273-292

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Handle: RePEc:bla:etrans:v:16:y:2008:i:2:p:273-292

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Cited by:
  1. Robert Orlowski & Regina T. Riphahn, 2008. "The East German Wage Structure after Transition," CESifo Working Paper Series 2511, CESifo Group Munich.

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