Long-Lasting Labour Market Consequences of German Unification

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Keywords:German Unification, Regional Unemployment, Regional Wage Dynamics, Wage Inequality, Wage Curve, Regional Development, Innovation, Industrial Structure, Patents JEL-classification: J31, R23, P31 AbstractThis article shows how the impulses of the transformation process in eastern Germany have spread through the economy and the labour market. The form of transformation has long-term effects on the form of control over the economy; it is managed largely from western firms. This fact has manifold consequences for the innovation behaviour of plants, among others, which in turn is further related to productivity and thus to the labour market. We argue that this transfers further to persistently lower wages and higher unemployment rates in eastern compared with western Germany.

Public Child‐Care Expansion and Changing Gender Ideologies of Parents in Germany

“…Yet historical East‐West differences are still reflected in longer employment interruption durations, lower maternal employment participation, and more traditional gender ideologies of parents toward maternal employment and using formal child care for young children in West Germany when compared with East Germany (e.g., Banaszak, ; Bauernschuster & Rainer, ; Gangl & Ziefle, ). In addition, the reunification process has resulted in long‐lasting labor market consequences, with persistently lower wages and higher unemployment in East Germany (Blien, Möller, Hong Van, & Brunow, ).…”

The persistent pay gap between Easterners and Westerners in Germany: A quarter‐century after reunification

“…We use the quantile regression methodology to identify the regional wage differentials at the 10 th , 25 th , 50 th , 75 th , and 90 th percentiles and attribute these gaps to the potential sources stated above. Finally, the most recent studies (Blien, Möller, thi Hong Van, & Drunow, 2016;Kluge & Weber, 2018;Smolny & Kirbach, 2011) addressing the Easterner-Westerner wage differential were conducted using data up to 2008 and 2010 respectively, and most of the empirical literature employed data from the 1990s or early 2000s. This paper uses data from the SOEP for 2016.…”

Decomposing the German East–West wage gap

“…With East German labour productivity lagging considerably behind West German levels, wages are unlikely to be aligned. Between 1998 and 2009, firm‐level labour productivity in East Germany ranged 30 percent below West German levels (Mueller, ) and innovation rates were also lower (Blien et al ., ). However, this productivity gap does not necessarily explain a large part of the observed wage gap.…”

“…In 2015, average hourly productivity (as measured by GDP per hour per worker) in East Germany still fell short of West Germany's productivity by 23 percent while the gap in gross wages and salaries per hour per employee amounted to 20 percent. This partial catching‐up of East German wages and productivity towards West German levels is well documented (see, for instance, Aumann and Scheufele, ; Barrell and te Velde, ; Blien et al ., ; Franz and Steiner, ; Smolny, ; Steiner and Wagner, ), but the determinants of the persistent wage and productivity gaps between East and West Germany have been explored only to a limited extent. Investigations focus on firm‐level efficiency (Funke and Rahn, ), industry structure and establishment size (Görzig et al ., ), locational conditions (Kirbach and Smolny, ) or different wage‐experience profiles (see Gernandt and Pfeiffer, ).…”