On the Post-Unification Development of Public and Private Pay in Germany
AbstractGerman post-unification in the 1990s is a period that was marked by substantial economic change, part of which was East German wages building towards the much higher West German levels. This paper studies the public-private pay gap in the fast changing economic and political environment of the 1990s using panel estimation techniques which control for unobserved individual heterogeneity. It shows that, while the overall pay gap between public and private sector stayed remarkably constant in the West, earnings differences in the East increased threefold in the late 1990s resulting in a substantial wage premium in the public sector. It is suggested that this premium is a result of the politically induced gap between pay and actual productivity. Furthermore, results vary greatly by gender indicating significantly larger female earnings differentials. Several institutional and political arguments are presented to explain this phenomenon.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1696.
Length: 21 pages
Date of creation: Jul 2005
Date of revision:
Publication status: published in: Manchester School, 2007, 75 (4), 422–444
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Other versions of this item:
- Axel Heitmueller & Kostas G. Mavromaras, 2007. "On The Post-Unification Development Of Public And Private Pay In Germany," Manchester School, University of Manchester, University of Manchester, vol. 75(4), pages 422-444, 07.
- J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-EEC-2005-08-13 (European Economics)
- NEP-LAB-2005-08-13 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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