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Post-Unification Wage Growth in East Germany

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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 William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 304.

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Date of creation: 01 Nov 1998
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Handle: RePEc:wdi:papers:1998-304

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  5. 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.
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  12. 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)
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  1. Hunt, Jennifer, 2000. "Why Do People Still Live in East Germany?," IZA Discussion Papers 123, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Young-Bae Kim, 2008. "Is There A Trade-off Between Regional Growth and National Income? Theory and Evidence from the EU," Department of Economics Discussion Papers 1008, Department of Economics, University of Surrey. [Downloadable!]
  3. Weber, Andrea Maria & Ammermüller, Andreas, 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!]
  4. Gernandt, Johannes & Pfeiffer, Friedhelm, 2008. "Wage Convergence and Inequality after Unification: (East) Germany in Transition," ZEW Discussion Papers 08-022, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  5. Thomas Bauer & Uwe Sunde & Holger Bonin, 2004. "Dismissal Protection and Worker Flows in Small Establishments," RWI Discussion Papers 0012, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
    Other versions:
  6. Orlowski, Robert & Riphahn, Regina T., 2008. "The East German Wage Structure after Transition," IZA Discussion Papers 3861, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. 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!]
  8. 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!]
  9. repec:ese:iserwp: is not listed on IDEAS
  10. 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:
  11. 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!]
  12. Nicole Gürtzgen, 2006. "The effect of firm- ans industry-level contracts on wages : evidence from longitudinal linked employer-employee data," ZEW Discussion Papers 06-82, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  13. 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!]
  14. 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.
  15. 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!]
  16. 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!]
  17. Helmut Rainer & Thomas Siedler, 2008. "Social Networks in Determining Migration and Labor Market Outcomes: Evidence from the German Reunification," CRIEFF Discussion Papers 0811, Centre for Research into Industry, Enterprise, Finance and the Firm. [Downloadable!]
  18. 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!]
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