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Determinants of Non-employment and Unemployment Durations in East Germany

  • Jennifer Hunt

Following monetary union with the west in June 1990, the employment rate for east German 18-54 year olds fell from 89% to 73% in six years, and the decline for women was considerably larger. This employment fall is possibly the worst of any European transition economy, yet one might have expected the east German transition to have been the most successful. I seek insight into the problem by examining the determinants of transitions between non-employment (or unemployment) and employment, using the 1990-1996 survey years of the German Socio- Economic Panel. Individuals over fifty and women have much longer non-employment durations, but the presence of children, and hence child care, does not appear to be important. More skilled individuals, as measured by their education and 1990 wage, have shorter non-employment spells. I also present results for employment duration. The most important similarity between the duration of non-employment and employment is the influence of the 1990 wage, which is consistent with the theory that trade-union wage rises for the less-skilled reduced employment. The most important difference is that the addition of covariates, particularly the 1990 wage, explains most of the gender gap in employment duration but little in non-employment duration.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7128.

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Date of creation: May 1999
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Publication status: published as Hunt, Jennifer. "Convergence And Determinants Of Non-Employment Durations In Eastern And Western Germany," Journal of Population Economics, 2004, v17(2,Jun), 249-266.
Handle: RePEc:nbr:nberwo:7128
Note: LS
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  1. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
  2. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, August.
  3. James C. Witte & Gert Wagner, 1995. "Employment and Fertility in East Germany after Unification," Discussion Papers of DIW Berlin 125, DIW Berlin, German Institute for Economic Research.
  4. Jennifer Hunt, 2001. "Post-Unification Wage Growth in East Germany," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 190-195, February.
  5. Alan B. Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Working Papers 4154, National Bureau of Economic Research, Inc.
  6. Licht, Georg & Steiner, Viktor, 1992. "Where have all the workers gone? Employment termination in East Germany after unification," ZEW Discussion Papers 92-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Begg, David & Portes, Richard, 1992. "Eastern Germany Since Unification: Wage Subsidies Remain a Better Way," CEPR Discussion Papers 730, C.E.P.R. Discussion Papers.
  8. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
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