Evolution of the East German wage structure

Eduard Brüll and Christina Gathmann

No 20-081, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We analyze the evolution of the wage structure in East Germany over the past two decades and compare it to West Germany. Both regions experienced a rise in wage inequality between 1995 and 2009 with wage dispersion in East Germany exceeding West Germany, esp. at the top. We also show that wage inequality is no longer rising in Germany and has even been declining in East Germany after 2009. Compositional changes of the workforce and selection along the employment margin play only a minor role as does the decline of union coverage for the rise in wage inequality. The adoption of minimum wages in selected industries, in contrast, explains all of the turnaround in East German wage inequality after 2009. Demand side changes seem to account for the rise in wage dispersion at the top.

Keywords: Wage inequality; Labor market institutions; Germany (search for similar items in EconPapers)
JEL-codes: J21 J23 J24 J31 J42 J64 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-lma and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:20081

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