East German unemployment: the myth of the irrelevant labor market

Christian Merkl and Dennis J. Snower

No 1435, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper indicates that East Germany's unemployment originates primarily in the labor market, caused by the fast wage adjustment after German reunification. We model the resulting labor market traps in a search and matching framework, show that they are difficult to overcome, and provide empirical evidence. We argue that under these circumstances, demand-side policies are effective mainly when they increase the economy's overall productivity and thereby help overcome the labor market traps.

Keywords: Unemployment; labor market trap; East Germany (search for similar items in EconPapers)
JEL-codes: E24 J30 J64 P2 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/24830/1/572548079.PDF (application/pdf)

Related works:
Journal Article: East German unemployment: the myth of the irrelevant labor market (2008)
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:1435

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 ().