Decomposing the German East-West wage gap

Arbeitspapier

We demonstrate that almost one half of the observed wage gap between East and WestGermany reflects differences in worker, establishment, and regional characteristicsrather than differences in productivity at the establishment level. Regional price andestablishment size differentials alone account for one quarter of the overall East-Westwage gap. Differences in employees’ characteristics and in productivity deliver muchsmaller but still statistically significant contributions. We derive these results from anOaxaca-Blinder decomposition using unusually rich linked employer-employee data.Our findings are quite stable over the period from 1996 to 2010 and over the wagedistribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 205

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics ; Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
• Subject: Wage gap ; decomposition ; German reunification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kluge, Jan ; Weber, Michael
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/123113
• Last update: 10.03.2025, 11:43 AM CET