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The Post-Unification German Labor Market

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Author Info
Bonin, Holger (IZA, Bonn)
Zimmermann, Klaus F. () (Bonn University, DIW, Berlin, CEPR, London and IZA, Bonn)

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Abstract

This study surveys the development of the East German labor market after the unification of Germany. We explain that in the last decade, East Germans were faced with very high levels of joblessness that considering labor market exits and active labor market policy, are only partly reported as unemployment. A review of the evidence on the effectiveness of labor market policies suggests that job creation and training programs did not substantially promote reemployment, though they may have alleviated social burdens from unemployment. Discussing what causes the high unemployment in the east, we claim that effects of wage policy have been overrated. Differences in unemployment rates are also the result of more ample labor supply. We show that employment levels in the east have almost converged on western standards. The structure of employment, however, differs. Shortage of part-time work, service jobs and independent employment indicates that East Germany has failed to develop a service economy. We argue that unqualified adaptation to western procedures aggravated the investment and employment problem in the east.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 185.

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Length: 36 pages
Date of creation: Aug 2000
Date of revision:
Handle: RePEc:iza:izadps:dp185

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Related research
Keywords: East Germany; unemployment; transitional economies;

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Find related papers by JEL classification:
J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

References listed on IDEAS
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.:

  1. Robert E. Wright, 1999. "The Rate of Return to Private Schooling," IZA Discussion Papers 92, Institute for the Study of Labor (IZA). [Downloadable!]
  2. John P. Haisken-DeNew & Christoph M. Schmidt, 1999. "Industry Wage Differentials Revisited: A Longitudinal Comparison of Germany and USA (1984-1996)," IZA Discussion Papers 98, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Boone, J. & Ours, J.C. van, 2000. "Modeling financial incentives to get unemployed back to work," Discussion Paper 2, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  4. Francis Breedon & Paul Fisher, . "M0: Causes and Consequences," Bank of England working papers 20, Bank of England.
    Other versions:
  5. van der Klaauw, Bas & van Ours, Jan C., 2000. "Labor Supply and Matching Rates for Welfare Recipients: An Analysis Using Neighborhood Characteristics," IZA Discussion Papers 102, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Husted, Leif & Nielsen, Helena Skyt & Rosholm, Michael & Smith, Nina, 2000. "Employment and Wage Assimilation of Male First Generation Immigrants in Denmark," IZA Discussion Papers 101, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Brunello, Giorgio & Graziano, Clara & Parigi, Bruno, 2000. "Ownership or Performance: What Determines Board of Directors' Turnover in Italy?," IZA Discussion Papers 105, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Pierre Cahuc & André Zylberberg, 1999. "Job Protection, Minimum Wage and Unemployment," IZA Discussion Papers 95, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Pierre Cahuc & André Zylberberg, 1999. "Redundancy Payments, Incomplete Labor Contracts, Unemployment and Welfare," IZA Discussion Papers 96, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. van Ours, Jan C. & Ridder, Geert, 2000. "Fast Track or Failure: A Study of the Completion Rates of Graduate Students in Economics," IZA Discussion Papers 107, Institute for the Study of Labor (IZA). [Downloadable!]
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Full references

Cited by:
(explanations, 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.)

  1. Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market After Reunification (Detailed Version)," IZA Discussion Papers 2066, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Puhani, Patrick A., 2001. "Wage Rigidities in Western Germany? Microeconometric Evidence from the 1990s," IRISS Working Paper Series 2001-07, IRISS at CEPS/INSTEAD. [Downloadable!]
    Other versions:
  3. Holger Bonin & Rob Euwals, 2002. "Participation Behavior of East German Women after German Unification," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 D1-1, International Conferences on Panel Data. [Downloadable!]
    Other versions:
  4. Andersson, Fredrik & A. Konrad, Kai, 2001. "Globalization and Human Capital Formation," IZA Discussion Papers 245, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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