Regional labor markets, network externalities and migration: the case of German reunification

Arbeitspapier

Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year old are leaving East Germany, and that the emigration has accelerated in recent years. To understand these patterns, I provide an extension of the standard labor search model by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration (West Germany) and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration (East Germany). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2006,004

Classification and Topics

• Classification: Wirtschaft
• Subject: German reunification ; labor market search ; network externalities ; migration ; regional economics ; Regionaler Arbeitsmarkt ; Binnenwanderung ; Regionale Arbeitsmobilität ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Uhlig, Harald
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/25087
• Last update: 10.03.2025, 11:46 AM CET