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Do the Best Go West? An Analysis of the Self-Selection of Employed East-West Migrants in Germany

Author Info

Listed author(s):
  • Brücker, Herbert

    ()

    (Institute for Employment Research (IAB), Nuremberg)

  • Trübswetter, Parvati

    ()

    (University of Erlangen-Nuremberg)

Abstract

Since the inequality of earnings in East Germany has approached West German levels in the late 1990s, the standard Roy model predicts that a positive selection bias of East-West migrants should disappear. Using a switching regression model and data from the IABemployment sample, we find however that employed East-West migrants remain positively self-selected with respect to unobserved abilities. This result is consistent with the predictions of our extended Roy model which considers moving costs that are negatively correlated with labour market abilities of individuals. Moreover, we find that wage differentials as well as differences in employment opportunities are the central forces which drive East-West migration after unification.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 986.

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Length: 43 pages
Date of creation: Jan 2004
Publication status: published in: Empirica, 2007, 34 (4), 371-395
Handle: RePEc:iza:izadps:dp986
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Keywords: self-selection; East Germany; migration;

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Find related papers by JEL classification:
  • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
  • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
  • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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  1. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 7-36, October.
  2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  3. 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.
  4. Jasso, Guillermina & Rosenzweig, Mark R, 1990. "Self-Selection and the Earnings of Immigrants: Comment," American Economic Review, American Economic Association, vol. 80(1), pages 298-304, March.
  5. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
  6. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-1149, September.
  7. Barry R. Chiswick, 1999. "Are Immigrants Favorably Self-Selected? An Economic Analysis," University of Chicago - George G. Stigler Center for Study of Economy and State 147, Chicago - Center for Study of Economy and State.
  8. 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.
  9. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
  10. 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.
  11. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
  12. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
  13. Stephen Goldfeld & Richard Quandt, 1973. "The Estimation of Structural Shifts by Switching Regressions," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 2, number 4, pages 475-485 National Bureau of Economic Research, Inc.
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