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Unification and the policy predicament in Germany

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  • Hughes Hallett, A.
  • Ma, Y.
  • Melitz, J.

Abstract

We argue that wages have increased so far ahead of labor productivity in east Germany as to produce a problem that will continue to hound German policy-makers for the next two decades.
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Suggested Citation

  • Hughes Hallett, A. & Ma, Y. & Melitz, J., 1996. "Unification and the policy predicament in Germany," Economic Modelling, Elsevier, vol. 13(4), pages 519-544, October.
  • Handle: RePEc:eee:ecmode:v:13:y:1996:i:4:p:519-544
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    References listed on IDEAS

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    1. Lewis S. Alexander & Joseph E. Gagnon, 1990. "The global economic implications of German unification," International Finance Discussion Papers 379, Board of Governors of the Federal Reserve System (U.S.).
    2. Franz, Wolfgang & Oser, Ursula & Winker, Peter, 1993. "Migratory movements in a disequilibrium macroeconometric model for West Germany," Discussion Papers, Series II 202, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
    4. Mckibbin, W.J., 1990. "Some Global Macroeconomic Implications Of German Unification," Papers 81, Brookings Institution - Working Papers.
    5. Hallett, A. J. Hughes & Ma, Yue, 1994. "Real adjustment in a union of incompletely converged economies: An example from East and West Germany," European Economic Review, Elsevier, vol. 38(9), pages 1731-1761, December.
    6. Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, January.
    7. Christian Thimann & Michael Breitner, 1995. "Eastern Germany and the conflict between wage adjustment, investment, and employment: A numerical analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 131(3), pages 446-469, September.
    8. Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
    9. Hughes Hallett, A J & Ma, Yue, 1993. "East Germany, West Germany, and Their Mezzogiorno Problem: A Parable for European Economic Integration," Economic Journal, Royal Economic Society, vol. 103(417), pages 416-428, March.
    10. Burda, Michael C & Funke, Michael, 1993. "Eastern Germany: Can't We Be More Optimistic?," CEPR Discussion Papers 863, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:

    1. Keller, Wolfgang, 2000. "From socialist showcase to Mezzogiorno? Lessons on the role of technical change from East Germany's post-World War II growth performance," Journal of Development Economics, Elsevier, vol. 63(2), pages 485-514, December.
    2. Claro, Sebastian, 2006. "Supporting inefficient firms with capital subsidies: China and Germany in the 1990s," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 377-401, June.
    3. Demertzis, Maria & Hughes Hallett, Andrew & Schermer, Nicolien, 2009. "Europeanization or globalization? Transnational wage bargaining and the distribution of activity in European labor markets," The North American Journal of Economics and Finance, Elsevier, vol. 20(2), pages 177-192, August.
    4. Baker, Jessica & Carreras, Oriol & Kirby, Simon & Meaning, Jack & Piggott, Rebecca, 2016. "Modelling events: The short-term economic impact of leaving the EU," Economic Modelling, Elsevier, vol. 58(C), pages 339-350.
    5. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Modeling Korean Unification," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 400-421, June.
    6. Christian Thimann & Michael Breitner, 1995. "Eastern Germany and the conflict between wage adjustment, investment, and employment: A numerical analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 131(3), pages 446-469, September.
    7. Czarnitzki, Dirk, 2003. "Extent and Evolution of the Productivity Gap in Eastern Germany," ZEW Discussion Papers 03-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Enzo Dia, 2004. "The bank’s risk insurance and the EMU," Working Papers 72, University of Milano-Bicocca, Department of Economics, revised May 2004.
    9. Ray Barrell & Dirk Willem te Velde, 2000. "Catching-up of East German Labour Productivity in the 1990s," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 271-297, August.
    10. Robert Brooks & Robert Faff & David Sokulsky, 2005. "The stock market impact of German reunification: international evidence," Applied Financial Economics, Taylor & Francis Journals, vol. 15(1), pages 31-42.
    11. Page, William, 2003. "Germany's Mezzogiorno revisited: Institutions, fiscal transfers and regional convergence," Research Notes 9, Deutsche Bank Research.
    12. Klodt, Henning, 1996. "West-Ost-Transfers und Strukturprobleme in den neuen Ländern," Open Access Publications from Kiel Institute for the World Economy 1677, Kiel Institute for the World Economy (IfW).
    13. M. Demertzis & A. Hughes Hallett, 2000. "Wage Inflation and the Distribution of Output Gaps in Europe: Insiders vs. Outsiders," WO Research Memoranda (discontinued) 631, Netherlands Central Bank, Research Department.
    14. Fritz Breuss, 2006. "Why Does Austria's Economy Grow Faster than Germany's?," WIFO Working Papers 280, WIFO.
    15. Marcus Noland & Sherman Robinson & Ligang Liu, 1999. "The economics of korean unification," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(3), pages 255-299.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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