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Post-Unification Wage Growth in East Germany

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Author Info
Jennifer Hunt

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Abstract

Following monetary union with west Germany in June 1990, the median real monthly wage of prime age east German workers rose by 83% in six years. I use the German Socio-Economic Panel data to investigate the determinants of this wage growth and some of its implications. For the 1990-1991 period I find that the biggest gainers were low-wage workers generally, and women and the less educated specifically. In the 1991-1996 period the biggest gainers were women and the better educated. Job changing rates were high; a majority of workers had changed jobs by 1996. The return to job changing, particularly changing to a job in the west, was high in 1990-1991 but fell greatly in the later period, so that overall only 18% of wage growth was due to job changing within the east, and 7% to east-west job changing.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6878.

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Date of creation: Jan 1999
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Publication status: published as Hunt, Jennifer. "The Transition In East Germany: When Is A Ten-Point Fall In The Gender Wage Gap Bad News?," Journal of Labor Economics, 2002, v20(1,Jan), 148-169.
Handle: RePEc:nbr:nberwo:6878

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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
P2 - Economic Systems - - Socialist Systems and Transition Economies

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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. Boal, William M & Pencavel, John, 1994. "The Effects of Labor Unions on Employment, Wages, and Days of Operation: Coal Mining in West Virginia," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 267-98, February. [Downloadable!] (restricted)
  2. M. Burda & C. Schmidt, . "Getting Behind The East-West Wage Differential: Theory and Evidence," Sonderforschungsbereich 373 1997-77, Humboldt Universitaet Berlin.
  3. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," NBER Working Papers 6167, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Edward J. Bird & Johannes Schwarze & Gert Wagner, 1994. "Wage effects of the move toward free markets in East Germany," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(3), pages 390-400, April.
  5. Steiner, Viktor & Wagner, Kersten, 1997. "East West German wage convergence - How far have we got?," ZEW Discussion Papers 97-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. M. Burda & M. Funke, . "Wages and Structural Adjustment in the New German States aareprints," Sonderforschungsbereich 373 1996-99, Humboldt Universitaet Berlin.
  7. Alan B. Krueger & Jorn-Steffen Pischke, 1992. "A COmparative Analysis of East and West German Labor Markets: Before andAfter Unification," NBER Working Papers 4154, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Boeri, Tito & Flinn, Christopher J., 1997. "Returns to Mobility in the Transition to a Market Economy," Working Papers 97-41, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
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  9. Begg, David & Portes, Richard, 1992. "Eastern Germany Since Unification: Wage Subsidies Remain a Better Way," CEPR Discussion Papers 730, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Burda, Michael C & Mertens, Antje, 1998. "Wages and Worker Displacement in Germany," CEPR Discussion Papers 1869, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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(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. Ammermüller, Andreas & Weber, Andrea Maria, 2003. "Education and Wage Inequality in Germany : A Review of the Empirical Literature," ZEW Discussion Papers 03-29, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  2. Anzelika Zaiceva, 2006. "Self-Selection and the Returns to Geographic Mobility : What Can Be Learned from the German Reunification "Experiment"," Discussion Papers of DIW Berlin 580, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  3. Jennifer Hunt, 1999. "Determinants of Non-employment and Unemployment Durations in East Germany," NBER Working Papers 7128, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Anzelika Zaiceva, 2006. "Self-Selection and the Returns to Geographic Mobility: What Can Be Learned from the German Reunification "Experiment"," IZA Discussion Papers 2524, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Ira N. Gang & Robert C. Stuart & Myeong-Su Yun, 2006. "Wage Growth and Inequality Change During Rapid Economic Transition," Departmental Working Papers 200631, Rutgers University, Department of Economics. [Downloadable!]
  6. Wolff, Joachim, 2006. "How does experience and job mobility determine wage gain in a transition and a non-transition economy? : the case of east and west Germany," IAB Discussion Paper 200627, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  7. Hunt, Jennifer, 2000. "Why Do People Still Live in East Germany?," IZA Discussion Papers 123, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Robert L. Hetzel, 2002. "German monetary history in the second half of the twentieth century: from the deutsche mark to the euro," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 29-64. [Downloadable!]
  9. Peter Dawson & Timothy Hinks & Duncan Watson, 2001. "German Wage Underpayment : An Investigation into Labor Market Inefficiency and Discrimination," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 107-114. [Downloadable!] (restricted)
  10. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process : facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  11. Regina T. Riphahn, 2002. "Bruttoeinkommensverteilung in Deutschland 1984 - 1999 und Ungleichheit unter ausländischen Erwerbstätigen," Discussion Papers of DIW Berlin 272, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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