What kind of shock was it? Regional integration and structural change in Germany after unification

Arbeitspapier

Eastern Germany's recovery from the ?unification shock? has been characterized by deep structural change – with apparent repercussions for the West as well – and an integration process involving both capital deepening (extensive and intensive investment) and labor thinning (net out-migration). I propose a constant-returns neoclassical model of economic integration which can account for these facts. Adjustment costs determine dynamics and steady state regional distribution of production factors. The model also explains persistent wage and capital rate-of-return differentials along the equilibrium path. Under competitive conditions, observed factor price differentials contain information on those adjustment costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1306

Classification and Topics

• Classification: Wirtschaft ; Geographic Labor Mobility; Immigrant Workers ; Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
• Subject: German reunification ; regional integration ; costs of adjustment ; capital mobility ; migration ; Nationale Einheit ; Schock ; Wirtschaftsintegration ; Wirtschaftliche Anpassung ; Anpassungskosten ; Interregionale Kapitalmobilität ; Binnenwanderung ; Schätzung ; Theorie ; Deutschland ; Neue Bundesländer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Burda, Michael C.
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/17834
• Last update: 01.03.20252025, 2:45 PM CET