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Determinants of Non-Employment and Unemployment Durations in East Germany

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  • Hunt, Jennifer

Abstract

Following monetary union with the west in June 1990, the employment rate for east German 18-54 year olds fell from 89% to 73% in six years, and the decline for women was considerably larger. This employment fall is possibly the worst of any European transition economy, yet one might have expected the east German transition to have been the most successful. I seek insight into the problem by examining the determinants of transitions between non-employment (or unemployment) and employment, using the 1990-1996 survey years of the German Socio-Economic Panel. Individuals over fifty and women have much longer non-employment durations, but the presence of children, and hence child care, does not appear to be important. More skilled individuals, as measured by their education and 1990 wage, have shorter non-employment spells. I also examine employment duration. The most important similarity between the duration of non-employment and employment is the influence of the 1990 wage, which is consistent with the theory that trade-union wage rises for the less-skilled reduced employment. The most important difference is that the addition of covariates, particularly the 1990 wage, explains most of the gender gap in employment duration but little in non-employment duration.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2182.

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Date of creation: Jun 1999
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Handle: RePEc:cpr:ceprdp:2182

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Keywords: Non-Employment; Transition Economies; Unemployment; Unions; Wages;

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References

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  1. Jennifer Hunt, 2001. "Post-Unification Wage Growth in East Germany," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 190-195, February.
  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. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," NBER Working Papers 6167, National Bureau of Economic Research, Inc.
  4. Begg, David & Portes, Richard, 1992. "Eastern Germany Since Unification: Wage Subsidies Remain a Better Way," CEPR Discussion Papers 730, C.E.P.R. Discussion Papers.
  5. Jennifer Hunt, 1992. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Discussion Papers of DIW Berlin 50, DIW Berlin, German Institute for Economic Research.
  6. Licht, Georg & Steiner, Viktor, 1992. "Where have all the workers gone? Employment termination in East Germany after unification," ZEW Discussion Papers 92-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. James C. Witte & Gert Wagner, 1995. "Employment and Fertility in East Germany after Unification," Discussion Papers of DIW Berlin 125, DIW Berlin, German Institute for Economic Research.
  8. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, October.
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Citations

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Cited by:
  1. Holger Bonin & Rob Euwals, 2002. "Participation Behavior of East German Women after German Unification," William Davidson Institute Working Papers Series 477, William Davidson Institute at the University of Michigan.
  2. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process: facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
  4. Colacelli, Mariana & Blackburn, David J.H., 2009. "Secondary currency: An empirical analysis," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 295-308, April.
  5. Ada Ferrer-i-Carbonell & Bernard M.S. Van Praag, 2002. "Income Satisfaction Inequality and its Causes," Tinbergen Institute Discussion Papers 02-014/3, Tinbergen Institute.
  6. Dong, Xiao-yuan & Pandey, Manish, 2012. "Gender and labor retrenchment in Chinese state owned enterprises: Investigation using firm-level panel data," China Economic Review, Elsevier, vol. 23(2), pages 385-395.
  7. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2002. "The Anatomy of Subjective Well-being," Tinbergen Institute Discussion Papers 02-022/3, Tinbergen Institute.
  8. repec:dgr:uvatin:2002023 is not listed on IDEAS
  9. Kathryn Anderson & Richard Pomfret, 2000. "Gender Effects of Transition: The Kyrgyz Republic," School of Economics Working Papers 2000-08, University of Adelaide, School of Economics.
  10. Ada Ferrer-i-Carbonell & Bernard M. S. van Praag, 2001. "The Subjective Costs of Health Losses Due to Chronic Diseases: An Alternative Model for Monetary Appraisal," Discussion Papers of DIW Berlin 262, DIW Berlin, German Institute for Economic Research.
  11. Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The Subjective Costs of Health Losses due to Chronic Diseases," Tinbergen Institute Discussion Papers 02-023/3, Tinbergen Institute.
  12. Lauer, Charlotte, 2003. "Education and Unemployment: A French-German Comparison," ZEW Discussion Papers 03-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Ferrer-i-Carbonell, Ada & van Praag, Bernard M. S., 2001. "The Subjective Costs of Health Losses due to Chronic Diseases: An Alternative Model Appraisal," IZA Discussion Papers 313, Institute for the Study of Labor (IZA).

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