Home Business & Economics United, Yet Apart? A Note on Persistent Labour Market Differences between Western and Eastern Germany
Article
Licensed
Unlicensed Requires Authentication

United, Yet Apart? A Note on Persistent Labour Market Differences between Western and Eastern Germany

  • Claus Schnabel EMAIL logo
Published/Copyright: February 16, 2016

Abstract

Comparing aggregate statistics and surveying selected empirical studies, this paper shows that the characteristics and results of labour markets in eastern and western Germany have become quite similar in some respects but still differ markedly in others even 25 years after unification. Whereas no substantial differences can be detected in firms’ labour demand decisions and in employees’ representation via works councils or trade unions, both parts of the country are somewhat apart concerning labour supply behaviour, labour productivity, wages, and bargaining coverage, and they still exhibit substantially different rates of unemployment. These differences may reflect observable and unobservable characteristics of economic actors as well as differences in behaviour, norms, and individuals’ attitudes.

JEL Classification: J01; J20; J30; J50; P27

Acknowledgments

The author would like to thank Tina Hinz, Boris Hirsch, Steffen Müller, Regina T. Riphahn, Joachim Wagner and two anonymous referees for helpful comments and suggestions.

References

Addison, J.T., A. Bryson, P. Teixeira, A. Pahnke, L. Bellmann (2010), The State of Collective Bargaining and Worker Representation in Germany: The Erosion Continues. IZA Discussion Paper No. 5030. Bonn.10.2139/ssrn.1634497Search in Google Scholar

Addison, J.T., A. Bryson, P. Teixeira, A. Pahnke, L. Bellmann (2013a), The Extent of Collective Bargaining and Workplace Representation: Transitions Between States and Their Determinants. A Comparative Analysis of Germany and Great Britain. Scottish Journal of Political Economy 60(2): 182–209.10.1111/sjpe.12007Search in Google Scholar

Addison, J.T., A. Bryson, P. Teixeira, A. Pahnke (2013b), Collective Agreement Status and Survivability: Change and Persistence in the German Model. Labour 27(3): 288–309.10.1111/labr.12012Search in Google Scholar

Addison, J.T., T. Schank, C. Schnabel, J. Wagner (2006), Works Councils in the Production Process. Schmollers Jahrbuch 126(2): 251–283.10.3790/schm.126.2.251Search in Google Scholar

Addison, J.T., P. Teixeira, K. Evers, L. Bellmann (2014), Indicative and Updated Estimates of the Collective Bargaining Premium in Germany. Industrial Relations 53(1): 125–157.10.1111/irel.12049Search in Google Scholar

Alesina, A., N. Fuchs-Schündeln (2007), Good-Bye Lenin (Or Not?): The Effect of Communism on People’s Preferences. American Economic Review 97(4): 1507–1528.10.1257/aer.97.4.1507Search in Google Scholar

Alm, B., D. Engel, A. Weyh (2014), Does Switching to a Western German Employer Still Pay Off? An Analysis for Eastern Germany. Jahrbücher für Nationalökonomie und Statistik 234(5): 546–571.10.1515/jbnst-2014-0501Search in Google Scholar

Anders, C., H. Biebeler, H. Lesch (2015), Mitgliederentwicklung und politische Einflussnahme: Die deutschen Gewerkschaften im Aufbruch? iw-trends 42(1): 21–36.Search in Google Scholar

Bauernschuster, S., H. Rainer (2012), Political Regimes and the Family: How Sex-Role Attitudes Continue to Differ in Reunified GERMANY. Journal of Population Economics 25(1): 5–27.10.1007/s00148-011-0370-zSearch in Google Scholar

Beblo, M., A. Heinze, E. Wolf (2008), Entwicklung der beruflichen Segregation von Männern und Frauen zwischen 1996 und 2005 – Eine Bestandsaufnahme auf betrieblicher Ebene. Zeitschrift für Arbeitsmarktforschung 41(2+3): 181–198.Search in Google Scholar

Bellmann, L., P. Ellguth, I. Möller (2006), Produktivitätsunterschiede in west- und ostdeutschen Betrieben im Verarbeitenden Gewerbe. S. 171–192 in: L. Bellmann, U. Ludwig (Hrsg.), Beschäftigungsanalysen mit den Daten des IAB-Betriebspanels, Beiträge zum Workshop des IAB und IWH 2005. Institut für Wirtschaftsforschung Halle.Search in Google Scholar

Bellmann, L., H.-D. Gerner, R. Upward (2011), Job and Worker Turnover in German Establishments. IZA Discussion Paper No. 6081. Bonn.10.2139/ssrn.1958736Search in Google Scholar

Bellmann, L., A. Pahnke (2006), Auswirkungen organisatorischen Wandels auf die betriebliche Arbeitsnachfrage. Zeitschrift für Arbeitsmarktforschung 39(2): 201–233.Search in Google Scholar

Blien, U., W. Dauth, T. Schank, C. Schnabel (2013), The Institutional Context of an ‘EmpiricalLaw’: The Wage Curve under Different Regimes of Collective Bargaining. British Journal of Industrial Relations 51(1): 59–79.10.1111/j.1467-8543.2011.00883.xSearch in Google Scholar

Boockmann, B., S. Steffes (2010), Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany? Industrial and Labor Relations Review 64(1): 109–127.10.1177/001979391006400105Search in Google Scholar

Brenke, K. (2014), Eastern Germany Still Playing Economic Catch-Up. DIW Economic Bulletin 4(11): 6–23.Search in Google Scholar

Cygan-Rehm, K. (2013), Parental Leave Benefit and Differential Fertility Responses: Evidence from a German Reform. BGPE Discussion Paper No. 142. Nürnberg.Search in Google Scholar

Doerr, A., T. Kruppe (2015), Training Vouchers, Local Employment Agencies, and Policy Styles. Journal for Labour Market Research 48(1): 41–56.10.1007/s12651-014-0168-zSearch in Google Scholar

Easterlin, R.A., A.C. Plagnol (2008), Life Satisfaction and Economic Conditions in East and West Germany Pre- and Post-Unification. Journal of Economic Behavior & Organization 68(3–4): 433–444.10.1016/j.jebo.2008.06.009Search in Google Scholar

Ellguth, P., S. Kohaut (2014), Tarifbindung und betriebliche Interessenvertretung: Ergebnisse aus dem IAB-Betriebspanel 2013. WSI Mitteilungen 67(4): 286–295.10.5771/0342-300X-2014-4-286Search in Google Scholar

Fahr, R., U. Sunde (2009), Did the Hartz Reforms Speed-up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions. German Economic Review 10(3): 284–316.10.1111/j.1468-0475.2008.00457.xSearch in Google Scholar

Felfe, C. (2012), The Willingness to Pay for Job Amenities: Evidence from Mothers’ Return to Work. Industrial and Labor Relations Review 65(2): 427–454.10.1177/001979391206500210Search in Google Scholar

Fitzenberger, B., K. Kohn, Q. Wang (2011), The Erosion of Union Membership in Germany: Determinants, Densities, Decompositions. Journal of Population Economics 24(1): 141–165.10.1007/s00148-009-0299-7Search in Google Scholar

Fitzenberger, B., K. Kohn, A.C. Lembcke (2013), Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany. Industrial and Labor Relations Review 66(1): 169–197.10.1177/001979391306600107Search in Google Scholar

Freier, R., V. Steiner (2007), ‘Marginal Employment’ and the Demand for Heterogenous Labour: Empirical Evidence from a Multi-Factor Labour Demand Model for Germany. IZA Discussion Paper No. 2577. Bonn.10.2139/ssrn.961853Search in Google Scholar

Fuchs, M. (2010), Determinanten regionaler Beschäftigungsentwicklung. Nürnberg.10.3278/300722wSearch in Google Scholar

Fuchs, M., M. Wesling, A. Weyh (2014), Potenzialnutzung in Ostdeutschland: Eine Analyse von Angebot und Nachfrage auf dem Arbeitsmarkt (IAB-Forschungsbericht 6/2014). Nürnberg.Search in Google Scholar

Gerlach, K., G. Stephan (2001), Lebenszufriedenheit und Erwerbsstatus: Ost- und Westdeutschland im Vergleich. Mitteilungen aus der Arbeitsmarkt- und Berufsforschung 34(4): 515–529.Search in Google Scholar

Gernandt, J., F. Pfeiffer (2008), Wage Convergence and Inequality after Unification: (East) Germany in Transition. ZEW Discussion Paper No. 08–22. Mannheim.10.2139/ssrn.1121704Search in Google Scholar

Geyer, J., P. Haan, K. Wrohlich (2014), The Effects of Family Policy on Mothers’ Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment. DIW Discussion Paper No. 1366. Berlin.10.2139/ssrn.2430133Search in Google Scholar

Grotheer, M., O. Struck, L. Bellmann, T. Gewiese (2004), Determinanten der Beschäftigungsstabilität – Chancen und Risiken von ‘Entrants’ im ost-westdeutschen Vergleich. S. 125–156 in: O. Struck, C. Köhler (Hrsg.), Beschäftigungsstabilität im Wandel?. München.Search in Google Scholar

Gühne, M., G. Markwardt (2014), Lohnunterschiede zwischen Ost- und Westdeutschland: Neue Einsichten. ifo Dresden berichtet 3/2014: 37–44.Search in Google Scholar

Gürtzgen, N. (2008), Das Forschungspotenzial von Linked-Employer-Employee-Daten am Beispiel von Lohneffekten der Tarifbindung. Wirtschafts- und Sozialstatistisches Archiv 2: 223–240.10.1007/s11943-008-0045-8Search in Google Scholar

Haan, P. (2005), State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin. DIW Discussion Paper No. 538. Berlin.Search in Google Scholar

Haan, P., K. Wrohlich (2011), Can Child Care Policy Encourage Employment and Fertility? Evidence from a Structural Model. Labour Economics 18: 498–512.10.1016/j.labeco.2010.12.008Search in Google Scholar

Hanel, B., R.T. Riphahn (2012), The Employment of Mothers – Recent Developments and Their Determinants in East and West Germany. Jahrbücher für Nationalökonomie und Statistik 232(2): 146–176.10.1515/jbnst-2012-0205Search in Google Scholar

Heineck, G., B. Süssmuth (2013), A Different Look at Lenin’s Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies. Journal of Comparative Economics 41(3): 789–803.10.1016/j.jce.2013.02.005Search in Google Scholar

Hirsch, B. (2013), The Impact of Female Managers on the Gender Pay Gap: Evidence from Linked Employer-Employee Data for Germany. Economics Letters 119(3): 348–350.10.1016/j.econlet.2013.03.021Search in Google Scholar

Hirsch, B., M. Oberfichtner, C. Schnabel (2012), Do Women Benefit from Competitive Markets? Product Market Competition and the Gender Pay Gap in Germany. Economics Bulletin 32(2): 1618–1624.Search in Google Scholar

Hirsch, B., M. Oberfichtner, C. Schnabel (2014), The Levelling Effect of Product Market Competition on Gender Wage Discrimination. IZA Journal of Labor Economics 3:19.10.1186/s40172-014-0013-1Search in Google Scholar

Holst, E., A. Wieber (2014), Eastern Germany Ahead in Employment of Women. DIW Economic Bulletin 4(11): 33–41.Search in Google Scholar

Jung, S. (2014), Employment Adjustment in German Firms. Journal for Labour Market Research 47(1+2): 83–106.10.1007/s12651-014-0159-0Search in Google Scholar

Jung, S., C. Schnabel (2011), Paying More than Necessary? The Wage Cushion in Germany. LABOUR 25(2): 182–197.10.1111/j.1467-9914.2010.00514.xSearch in Google Scholar

Kraft, K., J. Lang (2008), The Causes and Consequences of Adopting a Works Council. Jahrbücher für Nationalökonomie und Statistik 228(5+6): 512–532.10.1515/jbnst-2008-5-607Search in Google Scholar

Kreyenfeld, M., E. Geisler (2006), Müttererwerbstätigkeit in Ost- und Westdeutschland. Zeitschrift für Familienforschung 18(3): 333–360.10.20377/jfr-299Search in Google Scholar

Lee, K.S., D.F. Alwin, P.A. Tufis (2007), Beliefs about Women’s Labour in the Reunified Germany, 1991–2004. European Sociological Review 23(4): 487–503.10.1093/esr/jcm015Search in Google Scholar

Lehmann, H., A. Muravyev (2013), Labor Markets and Labor Market Institutions in Transition Economies. S. 350–362 in: P. Hare, G. Turley (Hrsg.), Handbook of the Economics and Political Economy of Transition. Abingdon.Search in Google Scholar

Lehmer, F., J. Ludsteck (2011), The Returns to Job Mobility and Inter-Regional Migration: Evidence from Germany. Papers in Regional Science 90(3): 549–572.10.1111/j.1435-5957.2010.00326.xSearch in Google Scholar

Martensen, F. (2014), Adverse Effects of Competition and Rents on Collective Bargaining Status – Evidence from Germany. Konstanz Working Paper 2014–15.Search in Google Scholar

Müller, S. (2013), Works Councils and Labour Productivity: Looking beyond the Mean. British Journal of Industrial Relations. online first (DOI: 10.1111/bjir.12037).Search in Google Scholar

Oberfichtner, M. (2013), Works Council Introductions: Do They Reflect Workers’ Voice?. Discussion Paper No. 83. Lehrstuhl für Arbeitsmarkt- und Regionalpolitik. University of Erlangen-Nürnberg.Search in Google Scholar

Orlowski, R., R.T. Riphahn (2009), The East German Wage Structure After Transition. Economics of Transition 17(4): 629–659.10.1111/j.1468-0351.2009.00367.xSearch in Google Scholar

Paqué, K.-H. (2009), Die Bilanz: Eine wirtschaftliche Analyse der deutschen Einheit. München.10.3139/9783446421967Search in Google Scholar

Priem, M., J. Schupp (2014), Everyone Happy – Living Standards in Germany 25 Years after Reunification. DIW Economic Bulletin 4(11): 65–71.Search in Google Scholar

Ragnitz, J. (2007), Explaining the East German Productivity Gap –The Role of Human Capital. Kiel Working Papers No. 1310. Kiel Institute for the World Economy.Search in Google Scholar

Rainer, H., T. Siedler (2009), Does Democracy Foster Trust? Journal of Comparative Economics 37(2): 251–269.10.1016/j.jce.2008.09.003Search in Google Scholar

Riphahn, R.T., D. Schnitzlein (2015), Wage Mobility in East and West Germany. Mimeo. University of Erlangen-Nürnberg.10.1016/j.labeco.2016.01.003Search in Google Scholar

Röhl, K.-H. (2014), 25 Jahre nach dem Mauerfall – Bilanz und Herausforderungen. iw-trends 41(3): 73–90.Search in Google Scholar

Schank, T., C. Schnabel, J. Stephani (2009), Geringverdiener: Wem und wie gelingt der Aufstieg?. Jahrbücher für Nationalökonomie und Statistik 229(5): 584–614.10.1515/jbnst-2009-0505Search in Google Scholar

Schnabel, C., J. Wagner (2007), The Persistent Decline in Unionization in Western and Eastern Germany, 1980-2004: What Can We Learn from a Decomposition Analysis? Industrielle Beziehungen 14(2): 118–13.10.2139/ssrn.942233Search in Google Scholar

Schnabel, C., S. Zagelmeyer, S. Kohaut (2006), Collective Bargaining Structure and Its Determinants: An Empirical Analysis with British and German Establishment Data. European Journal of Industrial Relations 12(2): 165–188.10.1177/0959680106065036Search in Google Scholar

Schneider, L. (2007), Mit 55 zum alten Eisen? Eine Analyse des Alterseinflusses auf die Produktivität anhand des LIAB. Zeitschrift für Arbeitsmarktforschung 40(1): 77–97.Search in Google Scholar

Smolny, W. (2009), Wage Adjustment, Competitiveness and Unemployment – East Germany after Unification. Jahrbücher für Nationalökonomie und Statistik 229(2+3): 130–145.10.1515/jbnst-2009-2-304Search in Google Scholar

Smolny, W., M. Kirbach (2011), Wage Differentials between East and West Germany: Are They Related to the Location or to the People? Applied Economics Letters 18(9): 873–879.10.1080/13504851.2010.511990Search in Google Scholar

Villanueva, E. (2007), Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany. Industrial and Labor Relations Review 60(4): 544–561.10.1177/001979390706000405Search in Google Scholar

Vogel, C. (2009), Teilzeitbeschäftigung – Ausmaß und Bestimmungsgründe der Erwerbsübergänge von Frauen. Zeitschrift für ArbeitsmarktForschung 42(2): 170–181.10.1007/s12651-009-0015-9Search in Google Scholar

Wolff, J., G. Stephan (2013), Subsidized Work Before and After the German Hartz Reforms: Design of Major Schemes, Evaluation Results and Lessons Learnt. IZA Journal of Labor Policy 2:16.10.1186/2193-9004-2-16Search in Google Scholar

Ziegler, A. (2005), Erwerbseinkommen. S. 241–306 in: S. Bothfeld, U. Klammer, C. Klenner, S. Leiber, A. Thiel, A. Ziegler (Hrsg.), WSI-FrauenDatenReport 2005. Berlin.Search in Google Scholar

Published Online: 2016-2-16
Published in Print: 2016-3-1

©2016 by De Gruyter Mouton

Downloaded on 14.3.2026 from https://www.degruyterbrill.com/document/doi/10.1515/jbnst-2015-1012/html
Scroll to top button