Regional labor markets, network externalities and migration: the case of German reunification

Harald Uhlig ()

No 1311, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year old are leaving East Germany, and that the emigration has accelerated in recent years. To understand these patterns, I provide an extension of the standard labor search model by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration (?West Germany?) and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration (?East Germany?). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.

Keywords: German reunification; labor market search; network externalities; migration; regional economics (search for similar items in EconPapers)
JEL-codes: E24 J11 J21 J24 J61 J64 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/17838/1/kap1311.pdf (application/pdf)

Related works:
Journal Article: Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification (2006)
Working Paper: Regional labor markets, network externalities and migration: The case of German reunification (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1311

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().