Germany's Economic Unification: An Assessment after Ten Years

Hans-Werner Sinn

No 7586, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A political miracle occurred when Germany was reunited, and at first glance an economic miracle has followed. Real incomes in the east have now reached the western level, and investment per capita has been much higher than in the west. However, every third deutschmark spent in the east has been coming from the west, investment in equipment has fallen below the west German per capita level, and convergence seems to have come to a halt at an overall labor productivity of only 55% of west Germany. Excessively high wages coupled with investment incentives that made the cost of capital negative rank high among the possible explanations. This paper describes reforms of the labor market that could help to make convergence continue.

JEL-codes: H0 O52 (search for similar items in EconPapers)
Date: 2000-03
New Economics Papers: this item is included in nep-dev, nep-eec, nep-his and nep-pub
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Published as Sinn, H. W. "Germany's Economic Unification: An Assessment After Ten Years," Review of International Economics, 2002, v10(1,Feb), 113-128.

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Journal Article: Germany’s Economic Unification: An Assessment after Ten Years (2002)
Working Paper: Germany’s Economic Unification: An Assessment after Ten Years (2002)
Working Paper: Germany's Economic Unification. An Assessment after Ten Years (2000)
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