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Wage Convergence and Inequality after Unification: (East) Germany in Transition

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  • Gernandt, Johannes
  • Pfeiffer, Friedhelm

Abstract

This paper investigates the wage convergence between East German workers and their West German counterparts after reunification. Our research is based on a comparison of three groups of workers defined as stayers, migrants and commuters to West Germany, who lived in East Germany in 1989, with groups of West German statistical twin workers, all taken from the Socio-Economic Panel (SOEP). According to our findings, wage convergence for stayers is roughly 75 percent and for commuters 85 percent. Wages of migrants to West Germany equal the ones of their West German statistical twins. We conclude that labor markets in East and West Germany are still characterized by wage differences but that the degree of inequality in both regions converged. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-022.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7294

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Keywords: Wage convergence; wage inequality; German unification; migration; commuting;

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References

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  1. Kohn, Karsten, 2006. "Rising Wage Dispersion, After All ! The German Wage Structure at the Turn of the Century," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(2), pages 843-881, May.
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  4. Gernandt, Johannes & Pfeiffer, Friedhelm, 2006. "Rising Wage Inequality in Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-19 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  11. Hauser, Richard & Fabig, Holger, 1999. "Labor Earnings and Household Income Mobility in Reunified Germany: A Comparison of the Eastern and Western States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(3), pages 303-24, September.
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Cited by:
  1. Usamah Fayez Al-Farhan, 2010. "Changes in the Gender Wage Gap in Germany during a Period of Rising Wage Inequality 1999-2006: Was it Discrimination in the Returns to Human Capital?," SOEPpapers on Multidisciplinary Panel Data Research 293, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Kohn, Karsten & Antonczyk, Dirk, 2011. "The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany," IZA Discussion Papers 5708, Institute for the Study of Labor (IZA).
  3. 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.
  4. Arntz, Melanie & Gregory, Terry & Lehmer, Florian, 2012. "Unequal Pay or Unequal Employment? What Drives the Skill-Composition of Labor Flows in Germany?," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62309, Verein für Socialpolitik / German Economic Association.
  5. Tilman Brück & Heiko Peters, 2009. "20 Years of German Unification: Evidence on Income Convergence and Heterogeneity," SOEPpapers on Multidisciplinary Panel Data Research 229, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Karsten Kohn & Dirk Antonczyk, 2013. "The aftermath of reunification," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 21(1), pages 73-110, 01.

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