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Job Movement and Real Wage Flexibility in Eastern and Western Parts of Germany

Author

Listed:
  • Fei Peng

    (Shanghai Lixin University of Accounting and Finance)

  • Sajid Anwar

    (University of the Sunshine Coast
    School of International Economics and Trade, Shanghai Lixin University of Accounting and Finance)

  • Lili Kang

    (Shanghai Lixin University of Accounting and Finance)

Abstract

We use a unique microdata set that covers the 1984–2009 period to estimate real wage flexibility in Eastern and Western parts of Germany. Empirical analysis reveals that wages of male job stayers in the Eastern and Western parts of Germany are rigid, which leads to significant wage flexibility for internal and external movers. At the aggregate level, wages of the external movers are more flexible than the wages of job stayers in bust periods (when labour market is slack) and more rigid than the wages of job stayers in boom periods (when labour market is tight). In overall terms, the West German labour market is mature but conditions in the East German labour market are consistent with transition economies. Wage flexibility in Germany’s labour market can be attributed to relatively more flexible wages of the external and internal movers in a slack labour market.

Suggested Citation

  • Fei Peng & Sajid Anwar & Lili Kang, 2020. "Job Movement and Real Wage Flexibility in Eastern and Western Parts of Germany," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(4), pages 764-789, October.
    • Handle: RePEc:spr:jecfin:v:44:y:2020:i:4:d:10.1007_s12197-020-09516-6
    DOI: 10.1007/s12197-020-09516-6
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    More about this item

    Keywords

    Real wage flexibility; Job movement; Unemployment; Eastern and Western Germany;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • M55 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Contracting Devices

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