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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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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0475.2007.00417.x
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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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References

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  1. 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.
  2. 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.
  3. Thiess Buettner & Johannes Rincke, 2007. "Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions," German Economic Review, Verein für Socialpolitik, vol. 8, pages 536-560, November.
  4. 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.
  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. 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..
  7. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  8. 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.
  9. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  11. 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).
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Citations

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Cited by:
  1. Niebuhr, Annekatrin & Stiller, Silvia, 2004. "Integration and Labour Markets in European Border Regions," HWWA Discussion Papers 284, Hamburg Institute of International Economics (HWWA).
  2. 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).
  3. Marius Brülhart & Céline Carrère & Frederico Trionfetti, 2012. "How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria," NRN working papers 2012-02, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  4. Zierahn, Ulrich, 2012. "The effect of market access on the labor market: Evidence from German reunification," HWWI Research Papers 131, Hamburg Institute of International Economics (HWWI).
  5. Thiess Buettner & Johannes Rincke, 2007. "Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions," German Economic Review, Verein für Socialpolitik, vol. 8, pages 536-560, November.
  6. Rima Izem & Nicola Fuchs-Schuendeln, 2007. "Explaining the Low Labor Productivity in East Germany - A Spatial Analysis," 2007 Meeting Papers 378, Society for Economic Dynamics.
  7. Peter Huber, 2005. "The Regional Effects of European Integration - an Empirical Analysis of Three Enlargement Episodes," ERSA conference papers ersa05p68, European Regional Science Association.
  8. Fidrmuc, Jarko & Hainz, Christa, 2013. "The effect of banking regulation on cross-border lending," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1310-1322.
  9. repec:iab:iabzaf:v:39:i:1:p:57-76 is not listed on IDEAS
  10. 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.
  11. Peter Huber, 2007. "Did Previous EU Enlargements Change the Regional Distribution of Production? An Empirical Analysis of Three Enlargement Episodes," WIFO Working Papers 283, WIFO.
  12. 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].

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