IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/5128.html
   My bibliography  Save this paper

East West German wage convergence - How far have we got?

Author

Listed:
  • Steiner, Viktor
  • Wagner, Kersten

Abstract

At the start of the German unification process it was a commonly held view that east German living conditions will converge to west Geman levels within a few years. This view was not only held by notoriously optimistic politicians but also by a great many of professional economists. With hindsight, this optimism turned out as unfounded. Although living standards have improved substantially for the great majority of east Germans, this is more related to the huge west German transfers than productivity improvements of the east German economy. For political reasons, wage increases stipulated in collective bargaining agreements were detached from economic factors, which the majority of economists considers the main culprit for the dramatic decline in employment and the unprecedented increase in unemployment in the east German economy.

Suggested Citation

  • Steiner, Viktor & Wagner, Kersten, 1997. "East West German wage convergence - How far have we got?," ZEW Discussion Papers 97-25, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5128
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24247/1/dp2597.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John P. Haisken-DeNew & Christoph M. Schmidt, 2000. "Interindustry and Interregion Differentials: Mechanics and Interpretation," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 516-521, August.
    2. Alan B. Krueger & Jorn-Steffen Pischke, 1995. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Chapters, in: Differences and Changes in Wage Structures, pages 405-446, National Bureau of Economic Research, Inc.
    3. Burda, M. & Schmidt, C., 1997. "Getting Behind The East-West Wage Differential: Theory and Evidence," SFB 373 Discussion Papers 1997,77, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    4. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-710, November.
    5. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429.
    6. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    7. Edward J. Bird & Johannes Schwarze & Gert G. Wagner, 1994. "Wage Effects of the Move toward Free Markets in East Germany," ILR Review, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
    8. repec:fth:prinin:307 is not listed on IDEAS
    9. Alan Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," Working Papers 686, Princeton University, Department of Economics, Industrial Relations Section..
    10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    11. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
    12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    13. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brück, Tilman & Peters, Heiko, 2009. "20 years of German unification: Evidence on income convergence and heterogeneity," Working Papers 03/2009, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    2. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Daniel S. Hamermesh, 2001. "The Changing Distribution of Job Satisfaction," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 1-30.
    4. Aretz, Bodo, 2013. "Gender Differences in German Wage Mobility," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80003, Verein für Socialpolitik / German Economic Association.
    5. Wolfgang Franz & Viktor Steiner, 2000. "Wages in the East German Transition Process: Facts and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 241-269, August.
    6. Wolf, Elke, 1998. "Do hours restrictions matter? A discrete family labor supply model with endogenous wages and hours restrictions," ZEW Discussion Papers 98-44, ZEW - Leibniz Centre for European Economic Research.
    7. Kohn, Karsten & Antonczyk, Dirk, 2011. "The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany," IZA Discussion Papers 5708, Institute of Labor Economics (IZA).
    8. Kallfaß, Hermann H., 1999. "Strukturwandel im staatlichen Einfluß," Ilmenau Economics Discussion Papers 17, Ilmenau University of Technology, Institute of Economics.
    9. Kertesi, Gábor & Köllő, János, 2001. "A gazdasági átalakulás két szakasza és az emberi tőke átértékelődése. A bérszerkezet átalakulása Magyarországon 1986-1999 - III. rész [The two stages of economic transformation and the re-evaluatio," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 897-919.
    10. 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.
    11. Buscher, Herbert S. & Parys, Juliane, 2006. "Prekäre Einkommenslagen in Deutschland: Ein Ost-West-Vergleich 1996 bis 2002," IWH Discussion Papers 2/2006, Halle Institute for Economic Research (IWH).
    12. Yvonne Schindele, 2010. "How Long Does it Take to Become an Entrepreneurial Society - The Case of German Convergence in Self-Employment," Jena Economics Research Papers 2010-015, Friedrich-Schiller-University Jena.
    13. 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.
    14. Kaiser, Ulrich, 1998. "The Impact of New Technologies on the Demand for Heterogenous Labour: Empirical Evidence from the German Business-Related Services Sector," ZEW Discussion Papers 98-26, ZEW - Leibniz Centre for European Economic Research.
    15. Wolff, Joachim, 2006. "How does experience and job mobility determine wage gain in a transition and a non-transition economy? : the case of east and west Germany," IAB-Discussion Paper 200627, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Hagen, Tobias, 2001. "Do temporary workers receive risk-premiums? Assessing the wage effects of fixed-term contracts in West-Germany by matching estimators compared with parametric apporaches," ZEW Discussion Papers 01-71, ZEW - Leibniz Centre for European Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Puhani, Patrick A., 1997. "All Quiet on the Wage Front? Gender, Public-Private Sector Issues, and Rigidities in the Polish Wage Structure," ZEW Discussion Papers 97-03, ZEW - Leibniz Centre for European Economic Research.
    2. Ira N. Gang & Robert C. Stuart & Myeong-Su Yun, 2006. "Wage Growth and Inequality Change During Rapid Economic Transition," Departmental Working Papers 200631, Rutgers University, Department of Economics.
    3. Usamah Fayez Al-Farhan, 2010. "A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-transition Germany 1999-2006: Accounting for Sample Selection," SOEPpapers on Multidisciplinary Panel Data Research 269, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Kohn, Karsten & Antonczyk, Dirk, 2011. "The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany," IZA Discussion Papers 5708, Institute of Labor Economics (IZA).
    5. Wolfgang Franz & Viktor Steiner, 2000. "Wages in the East German Transition Process: Facts and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 241-269, August.
    6. Steiner, Viktor & Wagner, Kersten, 1996. "Has earnings inequality in Germany changed in the 1980's?," ZEW Discussion Papers 96-32, ZEW - Leibniz Centre for European Economic Research.
    7. Puhani, Patrick A., 2001. "Wage rigidities in Western Germany? Microeconometric evidence from the 1990s," ZEW Discussion Papers 01-36, ZEW - Leibniz Centre for European Economic Research.
    8. Penka Kovacheva, 2011. "Human capital and wage inequality during transition: evidence from Bulgaria," Post-Communist Economies, Taylor & Francis Journals, vol. 23(2), pages 237-255.
    9. Fiona Duffy & Patrick Paul Walsh, 2000. "Individual Pay and Outside Options: Evidence from the Polish Labour Force Survey," William Davidson Institute Working Papers Series 364, William Davidson Institute at the University of Michigan.
    10. 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.
    11. Usamah Fayez Al-Farhan, 2010. "Changes in the Gender Wage Gap in Germany during a Period of Rising Wage Inequality 1999-2006: Was it Discrimination in the Returns to Human Capital?," SOEPpapers on Multidisciplinary Panel Data Research 293, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Johannes Gernandt & Friedhelm Pfeiffer, 2008. "Wage Convergence and Inequality after Unification: (East) Germany in Transition," SOEPpapers on Multidisciplinary Panel Data Research 107, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Viktor Steiner & Patrick A. Puhani, 1997. "Economic Restructuring, the Value of Human Capital, and the Distribution of Hourly Wages in Eastern Germany, 1990 to 1994," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(1), pages 197-204.
    14. 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.
    15. Karsten Kohn & Dirk Antonczyk, 2013. "The aftermath of reunification," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(1), pages 73-110, January.
    16. Eva Fransen & Janneke Plantenga & Jan Dirk Vlasblom, 2011. "Why do women still earn less than men? Decomposing the Dutch gender pay gap, 1996-2006," Post-Print hal-00719069, HAL.
    17. Töpfer, Marina, 2017. "Detailed RIF decomposition with selection: The gender pay gap in Italy," Hohenheim Discussion Papers in Business, Economics and Social Sciences 26-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    18. Monsueto, Sandro Eduardo & Simão, Rosycler Cristal Santos, 2008. "The impact of gender discrimination on poverty in Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    19. Aleksandra Anić & Gorana Krstić, 2019. "What Lies Behind The Gender Wage Gap In Serbia?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 137-170, October –.
    20. Ceriani,Lidia & Inchauste Comboni,Maria Gabriela & Olivieri,Sergio Daniel, 2015. "Understanding poverty reduction in Sri Lanka : evidence from 2002 to 2012/13," Policy Research Working Paper Series 7446, The World Bank.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:5128. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.