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Post-Unification Wage Growth in East Germany

  • Jennifer Hunt

Following monetary union with west Germany in June 1990 the median real monthly wage of prime age east German workers rose by 83% in six years. I use the German Socio-Economic Panel data to investigate the determinants of this wage growth and some of its implications. For the 1990-1991 period I find that the biggest gainers were low-wage workers generally, and women and the less educated specifically. In the 1991-1996 period the biggest gainers were women and the better educated. Job changing rates were high: a majority of workers had changed jobs by 1996. The return to job changing, particularly changing to a job in the west, was high in 1990-1991 but fell greatly in the later period, so that overall only 18% of wage growth was due to job changing within the east, and 7% to east-west job changing.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 304.

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Length: pages
Date of creation: 01 Nov 1998
Date of revision:
Handle: RePEc:wdi:papers:1998-304
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  1. Tito Boeri & Christopher J. Flinn, . "Returns to Mobility in the Transition to a Market Economy," Working Papers 123, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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  10. Karl-Dietrich Bedau, 1996. "Löhne und Gehälter in Ost- und Westdeutschland gleichen sich an, Lohnstückkosten jedoch nicht," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 63(8), pages 134-140.
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  14. Boal, William M & Pencavel, John, 1994. "The Effects of Labor Unions on Employment, Wages, and Days of Operation: Coal Mining in West Virginia," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 267-98, February.
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