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

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  • 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
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    Cited by:

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    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.

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