East-West German Wage Convergence after Unification: Migration or Institutions?

نویسنده

  • Michael C. Burda
چکیده

One of the most remarkable economic consequences of German unification was a rise by more than 100% in DM wages paid to Eastern German workers over the period 1990-1995, despite sharply rising unemployment and persistently low labor productivity. While wage convergence is consistent with economic integration, the evidence suggests that it was substantially accelerated by the West German collective bargaining system and supported by generous transfers from the richer West. Recent cutbacks in subsidies have not only arrested this process, but also have created pressure on the (west) German collective bargaining system, as many Eastern enterprises are unable to pay western wage levels and have begun to opt out of and challenge the credibility of industry wage agreements. These developments have ramifications for the future pattern of collective bargaining in the European monetary union as well as the eastward expansion of the European Union. Paper presented to the conference "Migration: Political Economy Aspects," New Orleans March 24-5 2000. This research was sponsored by the German Science Foundation (DFG Project BU 921/1-1 "Transfers im Gefolge der deutschen Wiedervereinigung"). I thank Kolja Grachev, Bianca Brandenburg, and especially Julia Miszler for helpful research assistance.

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تاریخ انتشار 2000