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The East German wage structure in the transition to a market economy


  • Steiner, Viktor
  • Bellmann, Lutz


An important question for the development of the East German labour market in the transition to a market economy is whether wage differentials by qualification, industry or region which were relatively small in the former GDR adjust to those in market economies which are more in line with differences in productivities and economic conditions. We estimate empirical earnings functions to quantify the contribution of various important factors shaping the earnings distribution in the East German transition process. Estimation is based on the first six waves of the Labour Market Monitor which is a representative panel data set of the East German workingage population covering the period 1990 to 1992. The specification of the estimated earnings functions is motivated by the various hypotheses of the development of the East German wage structure in the transformation process. Although we do find some similiarities with the existing wage structure in West Germany, the East German wage structure still differs in some important dimensions.

Suggested Citation

  • Steiner, Viktor & Bellmann, Lutz, 1994. "The East German wage structure in the transition to a market economy," ZEW Discussion Papers 94-17, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:9417

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    References listed on IDEAS

    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
    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. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
    4. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290 National Bureau of Economic Research, Inc.
    5. Michael Burda & Michael Funke, 1993. "German trade unions after unification — Third degree wage discriminating monopolists?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 129(3), pages 537-560, September.
    6. 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.
    7. Geib, Thorsten & Lechner, Michael & Pfeiffer, Friedhelm & Salomon, Susanne, 1992. "Die Struktur der Einkommensunterschiede in Ost- und Westdeutschland ein Jahr nach der Vereinigung," ZEW Discussion Papers 92-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. repec:fth:prinin:307 is not listed on IDEAS
    9. Licht, Georg & Steiner, Viktor, 1992. "Where have all the workers gone? Employment termination in East Germany after unification," ZEW Discussion Papers 92-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:

    1. Puhani, Patrick A., 1995. "Labour supply of married women in Poland: a microeconometric study based on the Polish labour force survey," ZEW Discussion Papers 95-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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