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Explaining Eastern Germany's Wage Gap: The Impact of Structural Change

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Author Info

  • Bernd Gorzig
  • Martin Gornig
  • Axel Werwatz

Abstract

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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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Post-Communist Economies.

Volume (Year): 17 (2005)
Issue (Month): 4 ()
Pages: 449-464

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Handle: RePEc:taf:pocoec:v:17:y:2005:i:4:p:449-464

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References

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  14. Beate Grundig & Carsten Pohl, 2003. "Interindustrielle Lohndifferenzierung in Zentraleuropa," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 56(24), pages 9-15, December.
  15. Josef Zweimuller & Rudolf Winter-Ebmer, 1999. "Firm-Size Wage Differentials in Switzerland: Evidence from Job-Changers," American Economic Review, American Economic Association, vol. 89(2), pages 89-93, May.
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Citations

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Cited by:
  1. Bernd Görzig & Martin Gornig & Axel Werwatz, 2007. "Produktvielfalt und Produktivität der IKT-Produzenten:Eine Analyse unter Nutzung verbundener amtlicher Unternehmensdaten," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 1(2), pages 145-161, October.
  2. Stephani, Jens, 2013. "Does it matter where you work? : employer characteristics and the wage growth of low-wage workers and higher-wage workers," IAB Discussion Paper 201304, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Michael Gühne & Gunther Markwardt, 2014. "Lohnunterschiede zwischen Ost- und Westdeutschland: Neue Einsichten," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 21(03), pages 37-44, 06.
  4. Uhlendorff, Arne, 2006. "From No Pay to Low Pay and Back Again? A Multi-State Model of Low Pay Dynamics," IZA Discussion Papers 2482, Institute for the Study of Labor (IZA).
  5. Bernd Goerzig & Martin Gornig & Axel Werwatz, 2007. "Produktdiversifizierung: Konvergenz zwischen ost- und westdeutschen Unternehmen, Eine Dekomposition mit Mikrodaten der amtlichen Statistik," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(2), pages 168-186, April.
  6. Juan Carlos Martinez Oliva, 2009. "Riunificazione intertedesca e politiche per la convergenza," Mo.Fi.R. Working Papers 14, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  7. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.

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