Volume 236, Issue 1 -

This study provides an analysis of the effect of migration and commuting on regional wage disparities in Germany. Using the INKAR dataset and the GSOEP from the years 1998 to 2009, dynamic GMM panel estimations are applied to consider dynamics as well as the simultaneity between migration and regional labor market circumstances. To begin with, the influence of migration on relative wage levels is analyzed. The results show a small positive wage effect due to the overall regional migration balance. However, only domestic migration is relevant for analyzing the influence of migration on regional wage disparities. The wage effect due to domestic migration turns out to be smaller and negative. Regions seem to benefit primary from a combination of internal and foreign migration, however effects are small. Assuming that individuals usually move to high-wage regions, the negative wage effect of German migration would trigger an adjustment mechanism of wage disparities. Therefore, a second dynamic GMM panel estimation tests whether an influence of the regional wage levels on migration exists. Results show no statistically significant effects. An adjustment of existing wage disparities due to migration is not likely to occur in Germany in the next few years.

Union representation has been in strong decline in most OECD countries with potentially important consequences for wages. What drives this decline? We try to answer this question by developing and implementing a detailed Fairlie decomposition approach. Using linked employer-employee data from the German Structure of Earnings Survey for 2001 and 2006, we document a sharp drop in collective bargaining coverage that amounts to 17 percentage points for males and 20 percentage points for females in West, and 8 and 14 percentage points, respectively, in East Germany. We find that neither changes in the characteristics nor changes in the coefficients associated with the characteristics as a whole provide an explanation for the drop in collective bargaining coverage. The drop in coverage is the result of an unexplained time trend.

This paper uses an augmented gravity model of trade to investigate the link between German development aid and sectoral exports from Germany to aid recipient countries with data from 1978–2011. The findings indicate that in the long run each dollar of German aid is associated with an average increase of US$ 0.83 US of German goods exports. The sectors that benefit the most in terms of exports and employment are machinery, electrical equipment and transport equipment. According to our estimates using input-output analysis and a partial equilibrium framework, the aid-induced gains in sectoral exports are associated with the gross employment of approximately 216,000 people.

This paper uses a dynamic framework of a small open economy to study the volatility effects of partially anticipated monetary policy shocks in which the public has imperfect information about the size and/or the timing of the future expansionary policy intervention. Our two main results are as follows: (i) Partially anticipated monetary policy shocks may be stabilizing, i. e. lead to a lower volatility than a fully anticipated monetary policy shock of the same form. (ii) However, we typically obtain a trade off in volatilities such that a simultaneous stabilization of inflation and output is not possible. If the public underestimates (overestimates) the size of the shock, output (inflation) may be stabilized. Our results imply that the central bank may have an incentive to withhold information from the public about the true central bank’s intention.