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Wage differentials between East and West Germany: are they related to the location or to the people?

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  • W. Smolny
  • M. Kirbach
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    Abstract

    Despite rapid economic integration and massive help from the Federal Government, large wage differences between East and West Germany still persist. We ask whether those differences are related to disadvantageous locational conditions in East Germany or could be found in the characteristics of the people living there. This article analyses income adjustment of East-West migrants based on the German Socio-Economic Panel (GSOEP), 1990-2008. Because migrants earned their income in both East and West Germany, the effect of the location can be identified. The results indicate that the wage differences cannot be attributed to the people.

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    Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

    Volume (Year): 18 (2011)
    Issue (Month): 9 ()
    Pages: 873-879

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    Handle: RePEc:taf:apeclt:v:18:y:2011:i:9:p:873-879
    DOI: 10.1080/13504851.2010.511990
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    Cited by:

    1. Ekaterina Selezneva & Philippe Van Kerm, 2013. "Inequality-adjusted gender wage differentials in Germany," Working Papers 334, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
    2. Inna Petrunyk & Christian Pfeifer, 2015. "Life satisfaction in Germany after reunification: Additional insights on the pattern of convergence," Working Paper Series in Economics 337, University of Lüneburg, Institute of Economics.
    3. Schnabel Claus, 2016. "United, Yet Apart? A Note on Persistent Labour Market Differences between Western and Eastern Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 157-179, March.
    4. Ekaterina Selezneva & Philippe Van Kerm, 2016. "A distribution-sensitive examination of the gender wage gap in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 21-40, March.
    5. Pfeifer, Christian & Petrunyk, Inna, 2015. "Life Satisfaction in Germany after Reunification: Additional Insights on the Pattern of Convergence," IZA Discussion Papers 9055, Institute for the Study of Labor (IZA).
    6. Sorgner, Alina & Fritsch, Michael & Kritikos, Alexander S., 2014. "Do Entrepreneurs Really Earn Less?," IZA Discussion Papers 8651, Institute for the Study of Labor (IZA).
    7. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," Ifo Working Paper Series Ifo Working Paper No. 205, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Smolny Werner, 2012. "Cyclical Adjustment, Capital-labor Substitution and Total Factor Productivity Convergence – East Germany After Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(4), pages 445-459, August.
    9. Inna Petrunyk & Christian Pfeifer, 2015. "Life Satisfaction in Germany after Reunification: Additional Insights on the Pattern of Convergence," SOEPpapers on Multidisciplinary Panel Data Research 764, DIW Berlin, The German Socio-Economic Panel (SOEP).

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