The Pattern of Convergence of Eastern German Labor Markets to Western Standards Post-Unification

Authors

Katie J. Lupo, Lake Forest College

Abstract

In this paper, I analyze the patterns of convergence of the eastern German labor markets to western standards following German unification. Soon after unification, the eastern states adopted the Deutschmark to avoid westward migration. Along with large transfers from the western states, the introduction of the Deutschmark caused real eastern wages to increase dramatically relative to increases in productivity. Using data from the German Socio-Economic Panel, this research analyzes inequality in education, unemployment, and wages between 1992 and 2003 for eastern and western Germans. I find an overall convergence of eastern levels to western standards in each of these areas. Despite the rises in equality between the eastern and western states, eastern levels remain far below western levels in 2003.

Recommended Citation

Lupo, Katie J. (2006) "The Pattern of Convergence of Eastern German Labor Markets to Western Standards Post-Unification," Undergraduate Economic Review: Vol. 2: Iss. 1, Article 6.
Available at: https://digitalcommons.iwu.edu/uer/vol2/iss1/6