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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 - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5128
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    Cited by:

    1. 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).
    2. 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.
    3. Werner Güth, 2011. "Rules (of Bidding) to Generate Equal Stated Profits: An Axiomatic Approach," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, pages 608-612.
    4. 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.
    5. Daniel S. Hamermesh, 2001. "The Changing Distribution of Job Satisfaction," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 1-30.
    6. 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.
    7. 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.
    8. 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 - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. 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 - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    10. Kallfaß, Hermann H., 1999. "Strukturwandel im staatlichen Einfluß," Ilmenau Economics Discussion Papers 17, Ilmenau University of Technology, Institute of Economics.
    11. 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.

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