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The Effect of Rapid Structural Change on Workers

Author

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  • Weigt Eva

    (Halle Institute for Economic Research (IWH), Kleine Märkerstraße 8, D-06108Halle (Saale), Germany)

Abstract

This paper deals with the question how workers’ labour market and non-monetary outcomes are impacted by a negative sector-specific labour demand shock. This issue is analysed in a setting of rapid structural change that happened in Eastern Germany after the fall of the Berlin Wall in 1989. The sector-specific labour demand shock can be assumed to be exogenous to other worker characteristics as it was not anticipated and as career planning was highly restricted in the GDR. Using survey data from the German Socio-Economic Panel (SOEP), I find considerable and partly persistent losses in labour market outcomes of workers from declining compared to booming industries. Life satisfaction of workers from declining industries is decreased in the short run whereas the probability to move to the West and to identify with a left-wing political party is increased merely in the longer run.

Suggested Citation

  • Weigt Eva, 2021. "The Effect of Rapid Structural Change on Workers," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(2), pages 239-285, April.
    • Handle: RePEc:jns:jbstat:v:241:y:2021:i:2:p:239-285:n:2
    DOI: 10.1515/jbnst-2019-0067
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    More about this item

    Keywords

    structural change; labour demand shock; East Germany; SOEP;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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