2021
DOI: 10.1111/pirs.12594
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The persistent pay gap between Easterners and Westerners in Germany: A quarter‐century after reunification

Abstract: A quarter of a century after Germany's reunification, Eastern Germans still earn substantially less than Western Germans. This paper revisits the German wage differential and isolates the effect of differing returns to human capital endowments, the possibility of a location effect, and human capital depreciation on the regional wage gap. While the endowment effect, location effect, and human capital depreciation jointly account for the wage differential between Easterners and Westerners living in the West, the… Show more

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Cited by 5 publications
(3 citation statements)
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References 26 publications
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“…For those who did not experience a transition, the distance to the poverty threshold variable was allowed to vary over time. For the United States we additionally controlled for race and for the region in Germany, because different structural inequalities lead to persistent disadvantages of non-White individuals in the US and residents in Eastern federal states in Germany (Akee et al, 2019;Baker et al, 2021;Dickey & Widmaier, 2021;Thiede et al, 2015). Results from robustness checks excluding these controls are highly consistent with those presented below.…”
Section: Analytical Strategysupporting
confidence: 59%
“…For those who did not experience a transition, the distance to the poverty threshold variable was allowed to vary over time. For the United States we additionally controlled for race and for the region in Germany, because different structural inequalities lead to persistent disadvantages of non-White individuals in the US and residents in Eastern federal states in Germany (Akee et al, 2019;Baker et al, 2021;Dickey & Widmaier, 2021;Thiede et al, 2015). Results from robustness checks excluding these controls are highly consistent with those presented below.…”
Section: Analytical Strategysupporting
confidence: 59%
“…One example for such a less developed region is East Germany, which—like many countries with a history under a communist regime—lagged dramatically behind in economic development compared to West Germany ( 47 , 48 ). Germany offers an ideal setting for studying whether otherwise identical higher education institutions affect developed and less developed regions differently provided that the necessary data are available.…”
Section: The Value Of Surface Groups As a Proxy For Economic Activitymentioning
confidence: 99%
“…Dickey and Widmaier (2021) obtain a real wage gap of about 1.2 even after having accounted for different human capital endowments, location effects, and human capital depreciation.…”
mentioning
confidence: 99%