Employment Policy in Transition


Lessons learned from ten years of market economy in former East Germany -
Renowned economists analyze the eastern German labor market

A historically unique experiment is about to enter its second decade - German unification. Early hopes for a rapid and smooth economic transformation soon turned out to be overly optimistic. Despite massive financial transfers, the political promise of a "blooming landscape" remains a vision. Actual developments have left deep scars on the labor market, and the effects will be felt for decades to come.
Was this outcome to be expected, perhaps even inevitable? What went wrong, and what were the available options? Or is the current state of the eastern German labor market in fact better than is commonly assumed? To answer these questions, the internationally renowned authors of this volume examine different stages of the labor market development in eastern Germany.
The relevant facts are certainly diverse: While the rate of unemployment in the "new Laender" is substantially higher than in the west, the actual amount of work done per labor force participant is about the same in both parts of the country. Moreover, real wage convergence has been much slower than originally predicted.

After an introduction to the subject and an overview of labor market developments in eastern Germany, part 1 of this volume will turn to specific issues of adjustment: wage trends, business start-ups, and early retirement. Part 2 reviews the policy options available in the transformation process and their labor market implications: wage subsidies, profit sharing, invested pay, further education, and various forms of active labor market policy. The final chapter draws parallels with the experience of other transition economies.

R. T. Riphahn / D. J. Snower / K. F. Zimmermann,
Employment Policy in Transition: The Lessons of German Integration for the Labour Market,
Heidelberg 2001; ISBN 3-540-41166-6.




Introduction (R. Riphahn, D. Snower, K. F. Zimmermann)
The Post-Unification German Labor Market (H. Bonin, K. F. Zimmermann)

I. Analysis of the German Labor Market Problem
Wages and Structural Adjustment in the New German States (M. Burda, M. Funke)
East/West-Wage Rigidity in United Germany (K.-H. Paqué)
Early Retirement in East and West Germany (A. Börsch-Supan, P. Schmidt)
Employment Effects of Newly Founded Businesses in East Germany (T. Hinz, R. Ziegler)
Earning Dynamics in the East German Transition Process (J. Schwarze, G. Wagner)

II. Policy Options
Eastern Germany Since Unification: Wage Subsidies Remain a Better Way (D. Begg, R. Portes)
Economic Efficiency and Social Acceptance of Wage Subsidies (H. Klodt)
Revenue-Sharing Subsidies as Employment Policy: Reducing the Cost of Stimulating East German Employment (D. Snower)
Investment Wages and Capital Market Imperfections (G. Illing)
Public Sector Sponsored Continuous Vocational Training in East Germany: Institutional Arrangements, Participants, and Results of Empirical Evaluations (M. Eichler, M. Lechner)
Active Labor Market Policies in Central Europe: First Lessons (H. Lehmann)


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