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

Author

Listed:
  • Buettner Thiess

    (Ifo Institute,Munich, Germany)

  • Rincke Johannes

    (Ifo Institute,Munich, Germany)

Abstract

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.

Suggested Citation

  • Buettner Thiess & Rincke Johannes, 2007. "Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions," German Economic Review, De Gruyter, vol. 8(4), pages 536-560, December.
    • Handle: RePEc:bpj:germec:v:8:y:2007:i:4:p:536-560
    DOI: 10.1111/j.1468-0475.2007.00417.x
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    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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