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Post-Unification Wage Growth in East Germany

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  • Hunt, Jennifer

Abstract

Following monetary union with west Germany in June 1990 the median real monthly wage of prime age east German workers rose by 83% in six years. I use the German Socio-Economic Panel data to investigate the determinants of this wage growth and some of its implications. For the 1990-1991 period I find that the biggest gainers were low-wage workers generally, and women and the less educated specifically. In the 1991-1996 period the biggest gainers were women and the better educated. Job changing rates were high: a majority of workers had changed jobs by 1996. The return to job changing, particularly changing to a job in the west, was high in 1990-1991 but fell greatly in the later period, so that overall only 18% of wage growth was due to job changing within the east, and 7% to east-west job changing.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2106.

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Date of creation: Mar 1999
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Handle: RePEc:cpr:ceprdp:2106

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Keywords: job changing; Migration; Unions; Wages;

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  1. David Begg & Richard Portes, 1993. "Eastern Germany since unification: wage subsidies remain a better way," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(4), pages 383-400, December.
  2. Alan B. Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Working Papers 4154, National Bureau of Economic Research, Inc.
  3. Boeri, Tito & Flinn, Christopher J., 1999. "Returns to Mobility in the Transition to a Market Economy," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 4-32, March.
  4. M. Burda & C. Schmidt, 1997. "Getting Behind The East-West Wage Differential: Theory and Evidence," SFB 373 Discussion Papers 1997,77, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  5. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
  6. repec:wop:humbsf:1998-24 is not listed on IDEAS
  7. Peter Krause, 1994. "Armut im Wohlstand: Betroffenheit und Folgen," Discussion Papers of DIW Berlin 88, DIW Berlin, German Institute for Economic Research.
  8. Edward J. Bird & Johannes Schwarze & Gert Wagner, 1994. "Wage effects of the move toward free markets in East Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
  9. Burda, Michael C & Mertens, Antje, 1998. "Wages and Worker Displacement in Germany," CEPR Discussion Papers 1869, C.E.P.R. Discussion Papers.
  10. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
  11. Boal, William M & Pencavel, John, 1994. "The Effects of Labor Unions on Employment, Wages, and Days of Operation: Coal Mining in West Virginia," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 267-98, February.
  12. Wolfgang Scheremet, 1995. "Tarifpolitik in Ostdeutschland: Ausstieg aus dem Lohnverhandlungsmodell der Bundesrepublik Deutschland?," Discussion Papers of DIW Berlin 113, DIW Berlin, German Institute for Economic Research.
  13. repec:wop:humbsf:1997-77 is not listed on IDEAS
  14. Karl-Dietrich Bedau, 1996. "Löhne und Gehälter in Ost- und Westdeutschland gleichen sich an, Lohnstückkosten jedoch nicht," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 63(8), pages 134-140.
  15. Steiner, Viktor & Wagner, Kersten, 1997. "East West German wage convergence - How far have we got?," ZEW Discussion Papers 97-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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