Why Do People Still Live in East Germany?

Jennifer Hunt

No 7564, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In 1997 GDP per capita in East Germany was 57% of that of West Germany, wage rates were 75% of western levels, and the unemployment rate was at least double the western rate of 7.8%. One would expect that if capital flows and trade in goods failed to bring convergence, labor flows would respond, enhancing overall efficiency. Yet net emigration from East Germany has fallen from high levels in 1989-1990 to close to zero. Using state-level data for all of Germany, available from 1991-1996, I am able to explain the downward trend in east to west migration using wage and unemployment information. Convergence in hourly wages is the most important factor. Analysis of the eastern sample of the German Socio-Economic Panel for 1990-1997 suggests that commuting is unlikely to substitute substantially for emigration. The individual-level data further indicate that emigrants are disproportionately young and skilled, and that individuals suffering a layoff or non-employment spell are also much more likely to emigrate.

JEL-codes: J61 P23 (search for similar items in EconPapers)
Date: 2000-02
New Economics Papers: this item is included in nep-ifn
Note: LS
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Citations: View citations in EconPapers (105)

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Related works:
Working Paper: Why Do People Still Live In East Germany? (2000)
Working Paper: Why Do People Still Live in East Germany? (2000)
Working Paper: Why Do People Still Live in East Germany? (2000)
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