IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

The East German Wage Structure after Transition

  • Robert Orlowski
  • Regina T. Riphahn

We extend the literature on transition economies' wage structures by investigating the returns to tenure and experience. This study applies recent panel data and estimation approaches that control for hitherto neglected biases. We compare the life cycle structure of East and West German wages for fulltime employed men in the private sector. The patterns in the returns to seniority are similar for the two regional labor markets. The returns to experience lag behind in the East German labor market, even almost 20 years after unification with significant differences particularly for high skill workers. The results are robust when only individuals are considered who started their labor market career in the market economy. We expect that the different returns are related to the heterogeneity of work experience gathered in East versus West Germany.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: First version, 2009
Download Restriction: no

Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 073.

in new window

Length: 41 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:bav:wpaper:073_orlowski
Contact details of provider: Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Christina Gathmann, 2005. "Large The Skill Loss of Older East Germans after Unification," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 125(1), pages 7-16.
  2. Alexandra Spitz-Oener, 2007. "Human capital, job tasks and technology in East Germany after reunification," National Institute Economic Review, National Institute of Economic and Social Research, vol. 201(1), pages 97-106, July.
  3. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process: facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Tito Boeri & Christopher J. Flinn, 1999. "Returns to Mobility in the Transition to a Market Economy," William Davidson Institute Working Papers Series 217, William Davidson Institute at the University of Michigan.
  5. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 437-59, July.
  6. Yuriy Gorodnichenko & Klara Sabirianova Peter, 2004. "Returns to Schooling in Russia and Ukraine: A Semiparametric Approach to Cross-Country Comparative Analysis," William Davidson Institute Working Papers Series 719, William Davidson Institute at the University of Michigan.
  7. SOEP Group, 2001. "The German Socio-Economic Panel (GSOEP) after More than 15 Years: Overview," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 7-14.
  8. Elke Holst & Dean R. Lillard & Thomas A. DiPrete, 2001. "Proceedings of the 2000 Fourth International Conference of German Socio-Economic Panel Study Users (GSOEP 2000): Editorial Introduction," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 5-6.
  9. Edward J. Bird & Johannes Schwarze & Gert Wagner, 1994. "Wage effects of the move toward free markets in East Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
  10. Hunt, Jennifer, 1999. "Post-Unification Wage Growth in East Germany," CEPR Discussion Papers 2106, C.E.P.R. Discussion Papers.
  11. Michael C. Burda, 2006. "Factor Reallocation in Eastern Germany after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 368-374, May.
  12. Dustmann, Christian & Ludsteck, Johannes & Schönberg, Uta, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA).
  13. Krueger, Alan B. & Pischke, Jörn-Steffen, 1992. "A comparative analysis of East and West German labor markets before and after unification," ZEW Discussion Papers 92-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  14. Andren, Daniela & Earle, John S. & Sapatoru, Dana, 2005. "The wage effects of schooling under socialism and in transition: Evidence from Romania, 1950-2000," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 300-323, June.
  15. Christian Dustmann & Sonia C. Pereira, 2008. "Wage Growth and Job Mobility in the United Kingdom and Germany," ILR Review, Cornell University, ILR School, vol. 61(3), pages 374-393, April.
  16. Michael C. Burda, 2007. "What kind of shock was it? Regional Integration and Structural Change in Germany after Unification," Kiel Working Papers 1306, Kiel Institute for the World Economy.
  17. Fleisher, Belton M. & Peter, Klara Sabirianova & Wang, Xiaojun, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," IZA Discussion Papers 1182, Institute for the Study of Labor (IZA).
  18. Fertig, Michael & Schmidt, Christoph M. & Schneider, Hilmar, 2006. "Active labor market policy in Germany--Is there a successful policy strategy?," Regional Science and Urban Economics, Elsevier, vol. 36(3), pages 399-430, May.
  19. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-76, February.
  20. Kohaut, Susanne & Schnabel, Claus, 2001. "Tarifverträge - nein danke!? Einflussfaktoren der Tarifbindung west- und ostdeutscher Betriebe," Discussion Papers 8, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  21. Harmgart, Heike & Jurajda, Stepan, 2004. "When do 'Female' Occupations Pay More?," CEPR Discussion Papers 4270, C.E.P.R. Discussion Papers.
  22. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
  23. Harald Uhlig, 2006. "Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 383-387, May.
  24. Noorkoiv, Rivo & Orazem, Peter F. & Puur, Allan & Vodopivec, Milan, 1997. "How Estonia's economic transition affected employment and wages (1989-95)," Policy Research Working Paper Series 1837, The World Bank.
  25. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, December.
  26. Cornelia Luchsinger & Jörg Wild & Rafael Lalive, 2001. "Do Wages Rise with Job Seniority? The Swiss Case," CEPE Working paper series 01-07, CEPE Center for Energy Policy and Economics, ETH Zurich.
  27. Christian Dustmann & Costas Meghir, 2001. "Wages, experience and seniority," IFS Working Papers W01/01, Institute for Fiscal Studies.
  28. Münich, Daniel & Svejnar, Jan & Terrell, Katherine, 2000. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," IZA Discussion Papers 122, Institute for the Study of Labor (IZA).
  29. Flanagan, Robert J., 1998. "Were communists good human capitalists? The case of the Czech Republic," Labour Economics, Elsevier, vol. 5(3), pages 295-312, September.
  30. Jones, Derek C. & Ilayperuma Simon, Kosali, 2005. "Wage determination under plan and early transition: Bulgarian evidence using matched employer-employee data," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 227-243, June.
  31. 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.
  32. Bernd Görzig & Martin Gornig & Axel Werwatz, 2008. "Firm wage differentiation in Eastern Germany," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(2), pages 273-292, 04.
  33. Jennifer Hunt, 2006. "Staunching Emigration from East Germany: Age and the Determinants of Migration," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 1014-1037, 09.
  34. Parent, Daniel, 2000. "Industry-Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 306-23, April.
Full references (including those not matched with items on IDEAS)

This item is featured on the following reading lists or Wikipedia pages:

  1. SOEP based publications

When requesting a correction, please mention this item's handle: RePEc:bav:wpaper:073_orlowski. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rebecca Hartschen)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.