Post-Unification Wage Growth in East Germany

Following monetary union with West Germany in 1990, the real wage of East German workers rose 83%. I use the German Socio-Economic Panel data to investigate the determinants of wage growth, and assess whether they are consistent with efficient restructuring. Although job-changing rates were initially high, the share of wage growth that accrued to movers was little higher than in the west, suggesting that the incentives to move were too low. For 1990 to 1991, the biggest gainers were low-wage workers generally, and women and the less-educated specifically. For 1991 to 1996, the biggest gainers were women and the better-educated.