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Why Do People Still Live in East Germany?

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Author Info

  • Hunt, Jennifer

    ()
    (Rutgers University)

Abstract

In 1997 GDP per capita in East Germany was 57% of that of West Germany, wage rates were 75% of western levels, and the unemployment rate was at least double the western rate of 7.8%. One would expect that if capital flows and trade in goods failed to bring convergence, labor flows would respond, enhancing overall efficiency. Yet net emigration from East Germany has fallen from high levels in 1989-1990 to close to zero. Using state-level data for all of Germany, available from 1991-1996, I am able to explain the downward trend in east to west migration using wage and unemployment information. Convergence in hourly wages is the most important factor. Analysis of the eastern sample of the German Socio-Economic Panel for 1990-1997 suggests that commuting is unlikely to substitute substantially for emigration. The individual-level data further indicate that emigrants are disproportionately young and skilled, and that individuals suffering a layoff or non-employment spell are also much more likely to emigrate.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 123.

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Length: 56 pages
Date of creation: Mar 2000
Date of revision:
Publication status: published as "Staunching Emigration from East Germany: Age and the Determinants of Migration" in: Journal of the European Economic Association, 2006, 4 (5), 1014–1037
Handle: RePEc:iza:izadps:dp123

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Keywords: transition economies; migration determinants; Migration;

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References

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  1. Jennifer Hunt, 1998. "Post-Unification Wage Growth in East Germany," William Davidson Institute Working Papers Series 304, William Davidson Institute at the University of Michigan.
  2. Burda, Michael C, 1993. "The Determinants of East-West German Migration: Some First Results," CEPR Discussion Papers, C.E.P.R. Discussion Papers 764, C.E.P.R. Discussion Papers.
  3. George J. Borjas, 1988. "Immigration And Self-Selection," NBER Working Papers 2566, National Bureau of Economic Research, Inc.
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  7. Daveri, Francesco & Faini, Riccardo, 1999. "Where Do Migrants Go?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 595-622, October.
  8. Michael C. Burda & Wolfgang Härdle & Marlene Müller & Axel Werwatz, 1998. "Semiparametric analysis of German East-West migration intentions: facts and theory," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 13(5), pages 525-541.
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  14. George J. Borjas & Stephen G. Bronars & Stephen J. Trejo, 1992. "Self-Selection and Internal Migration in the United States," NBER Working Papers 4002, National Bureau of Economic Research, Inc.
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  16. Jackman, Richard & Savouri, Savvas, 1992. "Regional Migration in Britain: An Analysis of Gross Flows Using NHS Central Register Data," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(415), pages 1433-50, November.
  17. Daveri, Francesco & Faini, Riccardo, 1996. "Where do Migrants Go? Risk-Aversion, Mobility Costs and the Locational Choice of Migrants," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1540, C.E.P.R. Discussion Papers.
  18. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 739-55, September.
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  20. Peter Krause, 1994. "Armut im Wohlstand: Betroffenheit und Folgen," Discussion Papers of DIW Berlin 88, DIW Berlin, German Institute for Economic Research.
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