20 Years of German Unification: Evidence on Income Convergence and Heterogeneity

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science. Terms of use: Documents inThe decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly.Any opinions expressed in this series are those of the author(s) and not those of DIW Berlin.Research disseminated by DIW Berlin may include views on public policy issues, but the institute itself takes no institutional policy positions. Hence some convergence took place in nominal terms since unification. Constructing income gaps by decennial cohorts, we discover that the most recent cohorts have the highest negative income gap. This probably reflects out-migration from East Germany by the young and highly skilled. On the basis of quantile regressions we find a positive income gap at the beginning of the 1990s for the lower income deciles (that is higher incomes in East Germany). This was due to retirees in the East with relative long employment histories receiving transfer payments by western standards. The income gap is insignificant when accounting for heterogeneity at the area level by including area level variables to our regression.

Decomposing the German East–West wage gap

“…The median wage gap, for instance, was 5.7 percentage points larger in 2010 than in 1996. A similar pattern of divergence during the 2000s has been reported by Brück and Peters () for household income.…”

Socialisation or Institutional Context: What Determines the First and Second Birth Behaviour of East–West German Migrants?

“…Thus, independent of socialisation or adaptation effects, migrants' behaviour patterns may be expected to differ from those of non-migrants at their place of origin. East-west German migrants have been found to be selected by sex, age, education, level of qualification, and partnership and parental status (Brück and Peters 2009;Büchel and Schwarze 1994;Gernandt and Pfeiffer 2008;Hunt 2000;Schneider et al 2008). 7 In addition, eastern German women have been shown to have a stronger work orientation than western German women and to be less inclined to adopt the male breadwinner model (Adler 2004).…”

“…7 In addition, eastern German women have been shown to have a stronger work orientation than western German women and to be less inclined to adopt the male breadwinner model (Adler 2004). Migrants are also likely to have a strong employment orientation (Brücker and Trübswetter 2004;Melzer 2013), as they mainly migrate for employment and education reasons (Brück and Peters 2009;Büchel and Schwarze 1994;Fuchs-Schündeln and Schündeln 2009;Hunt 2000;Schneider et al 2008). The relationship between fertility and migration is chiefly influenced by the motivation for migration, with employment reasons being associated with reduced fertility propensities (Castro Martin and RoseroBixby 2011; Mussino and Strozza 2012;Nedoluzhko and Andersson 2007).…”

“…Any adaptation in behaviour can therefore most likely be attributed to (short-term) adaptation rather than to the longterm processes associated with socialisation. In testing the selection effects, we are aided by an extensive literature on the characteristics of east-west German migrants (Brück and Peters 2009;Brücker and Trübswetter 2004;Büchel and Schwarze 1994;Fuchs-Schündeln and Schündeln 2009;Hunt 2000;Melzer 2013;Schneider et al 2008). For the selection hypothesis to be true, the migrants would have to be a special group of eastern Germans who decided to migrate to western Germany because their personal preferences were better met there.…”

Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia

“…In their seminal work, Barro and Sala-i-Martin (1991) found unconditional convergence between states of the United States [11]. Further studies also found evidence of unconditional convergence mostly in developed countries, including Canada [19], Australia [16], Spain [24], Germany during reunification [15] and Indonesia [41]. Other studies, mostly in less developed countries, found little evidence of convergence including Italy [50], Russia [29], China [32], Mexico [7], and Colombia [14,45].…”