East German unemployment: the myth of the irrelevant labor market
This paper indicates that East Germany's unemployment problem originates primarily in the labor market, caused by the fast wage adjustment after German reunification. We model the resulting labor market "traps" in a search and matching framework, show that they are difficult to overcome, and provide empirical evidence. We argue that under these circumstances, demandside policies are effective mainly when they increase the economy's overall productivity and thereby help overcome the labor market traps.
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Volume (Year): 31 (2008)
Issue (Month): 1 (September)
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References listed on IDEAS
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- Lechthaler, Wolfgang & Merkl, Christian & Snower, Dennis J., 2010.
"Monetary persistence and the labor market: A new perspective,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 34(5), pages 968-983, May.
- Lechthaler, Wolfgang & Merkl, Christian & Snower, Dennis J., 2008. "Monetary Persistence and the Labor Market: A New Perspective," IZA Discussion Papers 3513, Institute for the Study of Labor (IZA).
- Lechthaler, Wolfgang & Merkl, Christian & Snower, Dennis J., 2010. "Monetary Persistence and the Labor Market: A New Perspective," CEPR Discussion Papers 7650, C.E.P.R. Discussion Papers.
- Lechthaler, Wolfgang & Merkl, Christian & Snower, Dennis J., 2008. "Monetary persistence and the labor market: A new perspective," Kiel Working Papers 1409, Kiel Institute for the World Economy (IfW).
- Wolfgang Lechthaler & Christian Merkl & Dennis Snower, 2010. "Monetary Persistence and the Labor Market: A New Perspective," CESifo Working Paper Series 2935, CESifo Group Munich.
- Michael C. Burda & Wolfgang Härdle & Marlene Müller & Axel Werwatz, 1998.
"Semiparametric analysis of German East-West migration intentions: facts and theory,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 13(5), pages 525-541.
- Burda, Michael C. & Härdle, Wolfgang & Müller, Marlene & Werwatz, Axel, 1997. "Semiparametric analysis of German East-West migration intentions: Facts and theory," SFB 373 Discussion Papers 1998,3, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- John Hall & Udo Ludwig, 2007. "Explaining persistent unemployment in eastern Germany," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(4), pages 601-619.
- Hans-Werner Sinn, 1995. "Staggering along: wages policy and investment support in East Germany," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(4), pages 403-426, December.
- Burda, Michael C., 1993. "The determinants of East-West German migration: Some first results," European Economic Review, Elsevier, vol. 37(2-3), pages 452-461, April.
- Burda, Michael C, 1993. "The Determinants of East-West German Migration: Some First Results," CEPR Discussion Papers 764, C.E.P.R. Discussion Papers.
- Lehmann, Harald & Ludwig, Udo & Ragnitz, Joachim, 2005. "Originäre Wirtschaftskraft der neuen Länder noch schwächer als bislang angenommen," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 11(5), pages 134-145.
- Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 375-382, May.Full references (including those not matched with items on IDEAS)
- Merkl, Christian & Snower, Dennis J., 2006. "The Caring Hand that Cripples: The East German Labour Market after Reunification," CEPR Discussion Papers 5656, C.E.P.R. Discussion Papers.
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