Wages in the East German Transition Process - Facts and Explanations

Posted: 9 Nov 2003

See all articles by Wolfgang Franz

Wolfgang Franz

Centre for European Economic Research (ZEW)

Viktor Steiner

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research; IZA Institute of Labor Economics

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Abstract

We analyze wage developments in the East German transition process both at the macro and at the microeconomic level. At the macroeconomic level, we draw special attention to the important distinction between product and consumption wages, describe the development of various wage measures, labor productivity and unit labor costs in East Germany in relation to West Germany, and relate these developments to the system of collective wage bargaining. At the microeconomic level, we describe changes in the distribution of hourly wages between 1990 and 1997 and analyze the economic factors determining these changes by way of empirical wage functions estimated on the basis of the Socio- Economic Panel for East Germany. The paper also draws some conclusions on the likely future course of the East-West German wage convergence process.

JEL Classification: J31, J24, P51

Suggested Citation

Franz, Wolfgang and Steiner, Viktor, Wages in the East German Transition Process - Facts and Explanations. Available at SSRN: https://ssrn.com/abstract=392540

Wolfgang Franz (Contact Author)

Centre for European Economic Research (ZEW) ( email )

Postfach 103443
Mannheim, D-68034
Germany
+ 49 621 1235 100 (Phone)
+ 49 621 1235 222 (Fax)

Viktor Steiner

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

IZA Institute of Labor Economics

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

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