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Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions

  • Thiess Buettner
  • Johannes Rincke

This paper exploits the significant reduction in impediments to labor mobility in the process of German re-unification in order to identify labor supply shocks in the West German labor market. The focus is on the quasi-experiment of the border removal in the regions situated at the German-German border that faced a massive increase of cross-border labor supply. The results indicate that despite a gain in employment, the border removal was accompanied by a decline in wages and an increase in unemployment relative to other West German regions. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2007.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0475.2007.00417.x
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Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 8 (2007)
Issue (Month): (November)
Pages: 536-560

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Handle: RePEc:bla:germec:v:8:y:2007:i::p:536-560
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  1. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Thiess Buettner, 1999. "The effect of unemployment, aggregate wages, and spatial contiguity on local wages: An investigation with German district level data," Papers in Regional Science, Springer, vol. 78(1), pages 47-67.
  3. David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
  4. Randall Filer, 1992. "The Effect of Immigrant Arrivals on Migratory Patterns of Native Workers," NBER Chapters, in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 245-270 National Bureau of Economic Research, Inc.
  5. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
  6. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  7. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  8. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  9. Boeri, Tito & Brücker, Herbert, 2001. "Eastern Enlargement and EU-Labour-Markets: Perceptions, Challenges and Opportunities," IZA Discussion Papers 256, Institute for the Study of Labor (IZA).
  10. Thiess Buettner & Johannes Rincke, 2007. "Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions," German Economic Review, Verein für Socialpolitik, vol. 8, pages 536-560, November.
  11. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
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