Skills, Wages and Employment in Eastern and Western Germany
Disaggregated data from 30 two-digit manufacturing industies in the Eastern and Western parts of unified Germany are used to estimate employment from three skill categories of blue collar workers. Employment elasticities are uniformly higher in the East, and for unskilled labour. The former contradicts union claims that wages had little relevance for Eastern job losses, while the latter confirms the capital-skill complementarity hypothesis.
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