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Wage Convergence and Inequality after Unification: (East) Germany in Transition

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Author Info
Johannes Gernandt
Friedhelm Pfeiffer

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Abstract

This paper investigates the wage convergence between East German workers and their West German counterparts after reunification. Our research is based on a comparison of three groups of workers defined as stayers, migrants and commuters to West Germany, who lived in East Germany in 1989, with groups of West German statistical twin workers, all taken from the Socio-Economic Panel (SOEP). According to our findings, wage convergence for stayers is roughly 75 percent and for commuters 85 percent. Wages of migrants to West Germany equal the ones of their West German statistical twins. We conclude that labor markets in East and West Germany are still characterized by wage differences but that the degree of inequality in both regions converged.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number 107.

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Length: 20 p.
Date of creation: 2008
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Handle: RePEc:diw:diwsop:diw_sp107

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Related research
Keywords: Wage convergence; wage inequality; German unification; migration; commuting;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

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References listed on IDEAS
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  5. Kohn, Karsten, 2006. "Rising Wage Dispersion, After All ! The German Wage Structure at the Turn of the Century," ZEW Discussion Papers 06-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  19. Lechner, Michael & Pfeiffer, Friedhelm & O'Shea, Linda Giesecke, 1993. "Expected Job Loss in East Germany Shortly before German Unification," Empirical Economics, Springer, vol. 18(2), pages 289-306.
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