The Post-Unification German Labor Market

36 Pages Posted: 21 Nov 2000

See all articles by Klaus F. Zimmermann

Klaus F. Zimmermann

Global Labor Organization (GLO); UNU-MERIT; Maastricht University, Department of Economics; Free University Berlin; University of Bonn; Centre for Economic Policy Research (CEPR); Journal of Population Economics

Holger Bonin

IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research

Date Written: August 2000

Abstract

This study surveys the development of the East German labor market after the unification of Germany. We explain that in the last decade, East Germans were faced with very high levels of joblessness that considering labor market exits and active labor market policy, are only partly reported as unemployment. A review of the evidence on the effectiveness of labor market policies suggests that job creation and training programs did not substantially promote reemployment, though they may have alleviated social burdens from unemployment. Discussing what causes the high unemployment in the east, we claim that effects of wage policy have been overrated. Differences in unemployment rates are also the result of more ample labor supply. We show that employment levels in the east have almost converged on western standards. The structure of employment, however, differs. Shortage of part-time work, service jobs and independent employment indicates that East Germany has failed to develop a service economy. We argue that unqualified adaptation to western procedures aggravated the investment and employment problem in the east.

Keywords: East Germany, unemployment, transitional economies

JEL Classification: J40, O50, P27

Suggested Citation

Zimmermann, Klaus F. and Bonin, Holger, The Post-Unification German Labor Market (August 2000). Available at SSRN: https://ssrn.com/abstract=250881

Klaus F. Zimmermann (Contact Author)

Global Labor Organization (GLO) ( email )

Bonn
Germany

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UNU-MERIT ( email )

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Maastricht University, Department of Economics ( email )

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University of Bonn

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Journal of Population Economics

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Holger Bonin

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 303 (Phone)
+49 228 3894 510 (Fax)

ZEW – Leibniz Centre for European Economic Research

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D-68034 Mannheim, 68034
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