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The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany

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  • Kohn, Karsten

    ()
    (KfW Bankengruppe)

  • Antonczyk, Dirk

    ()
    (Deloitte FAS LLP)

Abstract

Using a large administrative data set, this paper studies the evolution of the East German wage structure throughout the transition period 1992-2001. Wage dispersion has generally been rising. The increase occurred predominantly in the lower part of the wage distribution for women and in the upper part for men. Sectoral transition affected women to a much larger extent than men. A sequential decomposition analysis using quantile regressions reveals that changes in industry-specific remuneration schemes contributed strongly to the rise in wage inequality in the lower part of the distribution for female workers. On the other hand, inter-industry trends away from the manufacturing sector towards service sectors contribute to the smaller increase of inequality in the upper part of the distribution, while causing wage dispersion in the lower part of the distribution to decline. Changes in the industry composition alone would have led to a polarization of wages for female workers. For men, changes in individual characteristics and a general time trend contribute the largest part to the increasing wage dispersion. These gender differences result from employment segregation across industries right after German reunification, and a particularly strong concentration of females in the public sector.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5708.

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Length: 39 pages
Date of creation: May 2011
Date of revision:
Publication status: published in: Economics of Transition, 2013, 21(1), 73-110
Handle: RePEc:iza:izadps:dp5708

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Keywords: wage distribution; transition; gender; decomposition; polarization; quantile regression; East Germany;

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References

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Citations

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Cited by:
  1. Aretz, Bodo, 2013. "Gender Differences in German Wage Mobility," IZA Discussion Papers 7158, Institute for the Study of Labor (IZA).
  2. Stephan Humpert, 2012. "Age and Gender Differences in Job Opportunities," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 235, University of Lüneburg, Institute of Economics.
  3. Aretz, Bodo, 2013. "Gender Differences in German Wage Mobility," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80003, Verein für Socialpolitik / German Economic Association.
  4. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 23(3), pages 271-310.

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