Wage Convergence and Inequality after Unification: (East) Germany in Transition

Gernandt, Johannes; Pfeiffer, Friedhelm

doi:10.2139/ssrn.1121704

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Wage Convergence and Inequality after Unification: (East) Germany in Transition

ZEW - Centre for European Economic Research Discussion Paper No. 08-022

25 Pages Posted: 17 Apr 2008 Last revised: 14 Aug 2008

See all articles by Johannes Gernandt

Johannes Gernandt

Center for European Economic Research (ZEW)

Friedhelm Pfeiffer

Centre for European Economic Research (ZEW); University of Mannheim - Department of Economics; IZA Institute of Labor Economics

Date Written: 2008

Abstract

This paper investigates the wage convergence between East German workers and their West German counterparts after reunification. Our research is based on a comparison of three groups of workers defined as stayers, migrants and commuters to West Germany, who lived in East Germany in 1989, with groups of West German statistical twin workers, all taken from the Socio-Economic Panel (SOEP). According to our findings, wage convergence for stayers is roughly 75 percent and for commuters 85 percent. Wages of migrants to West Germany equal the ones of their West German statistical twins. We conclude that labor markets in East and West Germany are still characterized by wage differences but that the degree of inequality in both regions converged.

Keywords: Wage convergence, wage inequality, German unification, migration, commuting

JEL Classification: J31, J30, J61

Suggested Citation: Suggested Citation

Gernandt, Johannes and Pfeiffer, Friedhelm, Wage Convergence and Inequality after Unification: (East) Germany in Transition (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-022, Available at SSRN: https://ssrn.com/abstract=1121704 or http://dx.doi.org/10.2139/ssrn.1121704