Since Eastern Germany's conversion to a market economy wages have remained considerably below the West German wage level. This article looks at the role of establishment-specific factors--such as sectoral affiliation and size of the labour force--in this process. A non-parametric decomposition that has played a prominent role in the gender wage gap literature is applied to breakdown the East--West wage gap into its constituent components. Using establishment data from German employment statistics, the article demonstrates that the catching-up process of Eastern Germany's wage level is hindered by the shift in its economic structure towards lower-paying types of companies, which has caused the lagging behind in the adjustment of wages.
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Volume (Year): 17 (2005) Issue (Month): 4 (December) Pages: 449-464 Download reference. The following formats are available: HTML
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David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1992.
"Wages, Profits and Rent-Sharing,"
NBER Working Papers
4222, National Bureau of Economic Research, Inc.
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Nickell, S & Vainiomaki, J & Wadhwani, S, 1994.
"Wages and Product Market Power,"
Economica,
London School of Economics and Political Science, vol. 61(244), pages 457-73, November.
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