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German Trade Unions After Unification: Third Degree Wage Discriminating Monopolists?

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  • Burda, Michael C
  • Funke, Michael

Abstract

After unification, real wages in Eastern Germany rose rapidly relative to labour productivity despite high and rising levels of unemployment. This substantial increase in wage levels relative to those in Western Germany is difficult to explain without recourse to models of union behaviour or collective bargaining. This paper applies and extends such models and evaluates plausible explanations for recent short-run wage developments in the ex-GDR.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 573.

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Date of creation: Aug 1991
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Handle: RePEc:cpr:ceprdp:573

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Keywords: German Unification; Labour Unions; Migration; Wage Determination;

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References

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  1. Burda, Michael C, 1991. "Labor and Product Markets in Czechoslovakia and the ex-GDR: A Twin Study," CEPR Discussion Papers 548, C.E.P.R. Discussion Papers.
  2. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  3. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
  4. Siebert, Horst, 1992. "Real adjustment in the transformation process: risk factors in East Germany," Kiel Working Papers 507, Kiel Institute for the World Economy.
  5. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429, February.
  6. Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S121-69, Supplemen.
  7. Siebert, Horst, 1992. "Real adjustment in the transformation process: Risk factors in East Germany," Open Access Publications from Kiel Institute for the World Economy 1915, Kiel Institute for the World Economy (IfW).
  8. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September.
  9. Colin Lawrence & Robert Z. Lawrence, 1985. "Manufacturing Wage Dispersion: An End Game Interpretation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(1), pages 47-116.
  10. Paz Espinosa, Maria & Rhee, Changyong, 1989. "Efficient Wage Bargaining as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 565-88, August.
  11. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June.
  12. Lindbeck, Assar & Snower, Dennis J., 1987. "Union activity, unemployment persistence and wage-employment ratchets," European Economic Review, Elsevier, vol. 31(1-2), pages 157-167.
  13. Hans-Werner Sinn, 1991. "Macroeconomic Aspects of German Unification," NBER Working Papers 3596, National Bureau of Economic Research, Inc.
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