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Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions

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  • Thiess Buettner
  • Johannes Rincke

Abstract

This paper exploits the significant reduction in impediments to labor mobility in the process of German re-unification in order to identify labor supply shocks in the West German labor market. The focus is on the quasi-experiment of the border removal in the regions situated at the German-German border that faced a massive increase of cross-border labor supply. The results indicate that despite a gain in employment, the border removal was accompanied by a decline in wages and an increase in unemployment relative to other West German regions. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2007.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 8 (2007)
Issue (Month): (November)
Pages: 536-560

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Handle: RePEc:bla:germec:v:8:y:2007:i::p:536-560

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  1. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  2. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Thiess Buettner, 1999. "The effect of unemployment, aggregate wages, and spatial contiguity on local wages: An investigation with German district level data," Papers in Regional Science, Springer, vol. 78(1), pages 47-67.
  4. Thiess Büttner & Johannes Rincke, 2004. "Labor Market Effects of Economic Integration - The Impact of Re-Unification in German Border Regions," CESifo Working Paper Series 1179, CESifo Group Munich.
  5. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  6. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  7. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  8. Boeri, Tito & Brücker, Herbert, 2001. "Eastern Enlargement and EU-Labour-Markets: Perceptions, Challenges and Opportunities," IZA Discussion Papers 256, Institute for the Study of Labor (IZA).
  9. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," Working Papers 633, Princeton University, Department of Economics, Industrial Relations Section..
  10. Randall Filer, 1992. "The Effect of Immigrant Arrivals on Migratory Patterns of Native Workers," NBER Chapters, in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 245-270 National Bureau of Economic Research, Inc.
  11. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
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Cited by:
  1. Marius Brülhart & Céline Carrère & Federico Trionfetti, 2011. "How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 11.04, Université de Lausanne, Faculté des HEC, DEEP.
  2. Peter Huber, 2008. "Did previous EU-enlargements change the regional distribution of production? An empirical analysis of three enlargement episodes," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 3(3/4), pages 187-206.
  3. Annekatrin Niebuhr & Silvia Stiller, 2004. "Integration and Labour Markets in European Border regions," ERSA conference papers ersa04p29, European Regional Science Association.
  4. Thiess Büttner & Johannes Rincke, 2004. "Labor Market Effects of Economic Integration - The Impact of Re-Unification in German Border Regions," CESifo Working Paper Series 1179, CESifo Group Munich.
  5. Nicola Fuchs-Schündeln & Rima Izem, 2007. "Explaining the Low Labor Productivity in East Germany. A Spatial Analysis," Kiel Working Papers 1307, Kiel Institute for the World Economy.
  6. Peter Huber, 2005. "The Regional Effects of European Integration - an Empirical Analysis of Three Enlargement Episodes," ERSA conference papers ersa05p68, European Regional Science Association.
  7. Moritz, Michael & Gröger, Margit, 2007. "The German-Czech border region after the fall of the Iron Curtain: Effects on the labour market : an empirical study using the IAB Employment Sample (IABS)," IAB Discussion Paper 200701, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Pasztor Szabolcs, 2012. "Development Possibilities Of The Hungarian-Ukrainian," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 385-389, December.
  9. repec:iab:iabzaf:v:39:i:1:p:57-76 is not listed on IDEAS
  10. Christa Hainz & Jarko Fidrmuc, 2012. "The Effect of Banking Regulation on Cross-Border Lending," Ifo Working Paper Series Ifo Working Paper No. 140, Ifo Institute for Economic Research at the University of Munich.
  11. Ulrich Zierahn, 2012. "The effect of market access on the labor market: Evidence from German reunification," MAGKS Papers on Economics 201239, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  12. Pflüger, Michael P. & Blien, Uwe & Möller, Joachim & Moritz, Michael, 2010. "Labor Market Effects of Trade and FDI: Recent Advances and Research Gaps," IZA Discussion Papers 5385, Institute for the Study of Labor (IZA).

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