The Aftermath of Reunification

38 Pages Posted: 23 Dec 2012

See all articles by Karsten Kohn

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank; IZA Institute of Labor Economics

Dirk Antonczyk

affiliation not provided to SSRN

Date Written: January 2013

Abstract

This article traces the evolution of the East German wage structure throughout the transition period 1992–2001. Wage dispersion has generally been rising. This increase occurred predominantly in the lower part of the wage distribution for women and in the upper part for men. Moreover, the sectoral transition affected female workers to a much larger extent than their male counterparts. A sequential decomposition analysis using quantile regressions reveals that changes in industry‐specific remuneration schemes contributed strongly to the rise in wage inequality in the lower part of the distribution for women, whereas changes in the industry composition alone would have led to a polarization of wages. In contrast, for men, changes in individual characteristics are the single most important factor contributing to the increasing wage dispersion. These gender differences are attributed to employment segregation across industries present right after German reunification.

Keywords: Wage distribution, gender, transition, polarization, decomposition, quantile regression, East Germany

JEL Classification: J31, C21

Suggested Citation

Kohn, Karsten and Antonczyk, Dirk, The Aftermath of Reunification (January 2013). Economics of Transition, Vol. 21, Issue 1, pp. 73-110, 2013, Available at SSRN: https://ssrn.com/abstract=2193174 or http://dx.doi.org/10.1111/ecot.12004

Karsten Kohn (Contact Author)

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank ( email )

Palmengartenstr. 5-9
Frankfurt, 60325
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Dirk Antonczyk

affiliation not provided to SSRN ( email )

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