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Do the Best Go West? An Analysis of the Self-Selection of Employed East-West Migrants in Germany

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Author Info

  • Brücker, Herbert

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Trübswetter, Parvati

    ()
    (University of Erlangen-Nuremberg)

Abstract

Since the inequality of earnings in East Germany has approached West German levels in the late 1990s, the standard Roy model predicts that a positive selection bias of East-West migrants should disappear. Using a switching regression model and data from the IABemployment sample, we find however that employed East-West migrants remain positively self-selected with respect to unobserved abilities. This result is consistent with the predictions of our extended Roy model which considers moving costs that are negatively correlated with labour market abilities of individuals. Moreover, we find that wage differentials as well as differences in employment opportunities are the central forces which drive East-West migration after unification.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 986.

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Length: 43 pages
Date of creation: Jan 2004
Date of revision:
Publication status: published in: Empirica, 2007, 34 (4), 371-395
Handle: RePEc:iza:izadps:dp986

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Keywords: self-selection; East Germany; migration;

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References

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  1. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, Econometric Society, vol. 58(5), pages 1121-49, September.
  2. Burda, Michael C. & Härdle, Wolfgang & Müller, Marlene & Werwatz, Axel, 1997. "Semiparametric analysis of German East-West migration intentions: Facts and theory," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 1998,3, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  3. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
  4. Jasso, Guillermina & Rosenzweig, Mark R, 1990. "Self-Selection and the Earnings of Immigrants: Comment," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 298-304, March.
  5. Hunt, Jennifer, 2000. "Why Do People Still Live In East Germany?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2431, C.E.P.R. Discussion Papers.
  6. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, National Bureau of Economic Research, Inc, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  7. Burda, Michael C., 1993. "The determinants of East-West German migration: Some first results," European Economic Review, Elsevier, Elsevier, vol. 37(2-3), pages 452-461, April.
  8. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, American Economic Association, vol. 77(4), pages 531-53, September.
  9. Robert J. Willis & Sherwin Rosen, 1978. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc.
  10. repec:wop:humbsf:1998-3 is not listed on IDEAS
  11. Chiswick, Barry R., 2000. "Are Immigrants Favorably Self-Selected? An Economic Analysis," IZA Discussion Papers 131, Institute for the Study of Labor (IZA).
  12. Stephen Godfeld & Richard Quandt, 1973. "The Estimation Of Structural Shifts By Switching Regressions," NBER Chapters, National Bureau of Economic Research, Inc, in: Annals of Economic and Social Measurement, Volume 2, number 4, pages 473-483 National Bureau of Economic Research, Inc.
  13. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
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Citations

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Cited by:
  1. Kuehn, Zoe, 2012. "Migration, Wages, and Parental Background: Obstacles to Entrepreneurship and Growth in East Germany," MPRA Paper 49250, University Library of Munich, Germany.
  2. Herbert Brücker & Elke J. Jahn, 2011. "Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 113, pages 286-317, 06.
  3. Ochsen, Carsten, 2009. "Regional labor markets and aging in Germany," Thuenen-Series of Applied Economic Theory, University of Rostock, Institute of Economics 102, University of Rostock, Institute of Economics.
  4. Peter Huber & Klaus Nowotny, 2009. "Return Intentions among Potential Migrants and Commuters: The Role of Human Capital, Deprivation and Networks," WIFO Working Papers, WIFO 342, WIFO.
  5. Giulietti, Corrado & Ning, Guangjie & Zimmermann, Klaus F, 2011. "Self-employment of rural-to-urban migrants in China," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8473, C.E.P.R. Discussion Papers.
  6. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR," Jahrbuch für Regionalwissenschaft, Springer, Springer, vol. 30(2), pages 159-189, September.
  7. Christian Merkl & Dennis Snower, 2008. "East German Unemployment: The Myth of the Irrelevant Labor Market," Kiel Working Papers, Kiel Institute for the World Economy 1435, Kiel Institute for the World Economy.
  8. Johannes Gernandt & Friedhelm Pfeiffer, 2008. "Wage Convergence and Inequality after Unification: (East) Germany in Transition," SOEPpapers on Multidisciplinary Panel Data Research 107, DIW Berlin, The German Socio-Economic Panel (SOEP).
  9. repec:iab:iabzaf:v:38:i:2/3:p:419-440 is not listed on IDEAS
  10. Snower, Dennis J. & Merkl, Christian, 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).
  11. Biavaschi, Costanza & Elsner, Benjamin, 2013. "Let's Be Selective about Migrant Self-Selection," IZA Discussion Papers 7865, Institute for the Study of Labor (IZA).
  12. Alexander Kubis & Lutz Schneider, 2007. "Determinants of Female Migration – The Case of German NUTS 3 Regions," IWH Discussion Papers, Halle Institute for Economic Research 12, Halle Institute for Economic Research.
  13. Buch, Tanja & Hamann, Silke & Meier, Henning & Niebuhr, Annekatrin & Peters, Cornelius & Puckelwald, Johannes, 2011. "Analyse der Berücksichtigung eines Wanderungsindikators im Rahmen der Abgrenzung des GRW-Fördergebiets : Gutachten für die Gemeinschaftsaufgabe "Verbesserung der regionalen Wirtschaftsstruktur," IAB-Forschungsbericht, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201104, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  14. Melania Salazar-Ordóñez & Carlos García-Alonso & Gabriel Perez-Alcalá, 2011. "Wage Gaps And Migrantion Costs: An Analysis From Simulation Data," ERSA conference papers ersa11p347, European Regional Science Association.
  15. Terry Gregory & Melanie Arntz & Florian Lehmer, 2011. "Unequal Pay or Unequal Employment? What Drives the Self-Selection of Internal Migrants in Germany?," ERSA conference papers ersa11p972, European Regional Science Association.

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