The Labour Market in East Germany

Gerhard Bosch and Matthias Knuth

Cambridge Journal of Economics, 1993, vol. 17, issue 3, 295-308

Abstract: After currency union with West Germany, industrial production in East Germany fell by approximately one third, resulting in job losses of more than 40 percent. The article investigates the fate of workers made redundant, a large proportion of whom have been assimilated into various labor market policy measures. The scale of these measures, which exceeds any active labor market policy hitherto implemented in Germany, cannot be sustained. Since wages in East Germany are rapidly being adjusted upwards to West German levels, the cost of labor market policy programs is also rising very quickly. The authors conclude that labor market policy is not--as intended--acting as a bridge into new employment but has rather allowed the large combines to dismiss workers without facing any great resistance. Copyright 1993 by Oxford University Press.

Date: 1993
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