Minimum Wages and Employment: The Case of German Unification

Bernhard Heitger

No 1045, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Analysis in terms of the two-sector open economy shows that in bringing the market economy to East Germany, West Germany seems to have disregarded important fundamentals. Premature formation of a currency union led to a substantial real appreciation of the East German currency. Premature implementation of the West German system of wage bargaining resulted in inappropriate minimum wage schedules. Both measures made East German production possibilities and employment decline.

Keywords: Minimum Wages; Employment; German Unification (search for similar items in EconPapers)
JEL-codes: E24 P23 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1045

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