The persistent pay gap between Easterners and Westerners in Germany: A quarter‐century after reunification

A quarter of a century after Germany's reunification, Eastern Germans still earn substantially less than Western Germans. This paper revisits the German wage differential and isolates the effect of differing returns to human capital endowments, the possibility of a location effect, and human capital depreciation on the regional wage gap. While the endowment effect, location effect, and human capital depreciation jointly account for the wage differential between Easterners and Westerners living in the West, the same does not hold true for individuals settled in the East, where part of the wage gap remains unexplained. Un cuarto de siglo después de la reunificación de Alemania, los alemanes del Este siguen ganando bastante menos que los del Oeste. Este artículo revisa el diferencial salarial alemán y aísla el efecto de los diferentes rendimientos de las dotaciones de capital humano, la posibilidad de un efecto de localización y la depreciación del capital humano en la brecha salarial regional. Mientras que el efecto de la dotación, el efecto de la localización y la depreciación del capital humano explican conjuntamente el diferencial salarial entre los orientales y los occidentales que viven en el Oeste, no ocurre lo mismo con los individuos asentados en el Este, donde parte de la brecha salarial sigue sin poderse explicar. ドイツ再統一から四半世紀が経った今でも、東独出身者の所得は西独出身者よりかなり少ない。本稿では、ドイツの賃金格差を再検討し、地域の賃金格差に対する、人的資本の賦存への異なるリターン、立地効果の可能性、人的資本の減価償却の影響を特定する。ドイツ西部に住む東独出身者と西独出身者の賃金格差には、授かり効果、立地効果、人的資本の減価がともに寄与しているが、これは賃金格差の理由が部分的に依然不明な東部に定住した人には当てはまらない。 With the reunification of East and West Germany in 1990, the challenging process of economic, political, and institutional integration of two seemingly incompatible systems began. Previously occupied by the communist regime of the Soviet Union, the former territory of the German Democratic Republic (GDR or ‘East’) underwent rapid assimilation to Western capitalism and liberalism in the years that followed. Numerous aspects of the transition process occurred immediately, such as freedom of movement and the privatization of the Eastern economy that were implemented directly after the of the in in still were to the East to the of capital and in the aspects of the A of that not the wage gap between Easterners and still years after While in 1990, to of the the the wage that between in East and West Germany and capital to in regional and to of Western to wage between the two the of and to West German in the of a wage differential between East and West Germany to the that transition in than by This paper to and of the German regional wage of the on the wage gap the in and for in the to the gap between Easterners and of location after to to the in the the paper of the wage in human capital location and human capital the no the wage gap of the on regional wage East to or the wage by Easterners to a of the regional wage paper the for the Eastern and Western German wage for Easterners settled in the East and in the West, and for Westerners settled in the East and in the wage by the of endowment by the effect of for on the of human capital the German wage gap the the that the wage gap between Easterners and Westerners the wage the between the and the the wage by the the to the regional wage the and and to the the the wage differential were to and and of the the or This paper the for of the wage differential between East and West Germans a quarter of a century after reunification, to the of regional wage differential and to regional in not as by the of wage gap on to in or in the wage by East Germans to Western paper as the and that the wage differential in the and and the of the in a of and for by the and of and of human capital directly to in to of of human the of endowment in to This that part the wage gap between Easterners and endowment effect the of human capital endowments, the location effect and human capital depreciation directly to the of by as and or in to the wage gap not in endowment effect the wage that of human capital to less individuals to human capital as where individuals the and a of human the of a the of as as the of the not and the to of in the wage the of the This not to to of human capital as for individuals the to human capital by than the of the human where the wage not to to than in the of human capital that the of and individuals the of and to the the that individuals to a on than that does not in the of for less individuals to to the same as a the of While on human capital to the that individuals of human capital on and to to a in the differential in human capital between to as the endowment of the wage gap between Easterners and Westerners in part of gap by Easterners less human capital to location effect the differential between that the of in regional the on in returns to that by regional in and the of human capital in to in not of the same in and in the the the capital that in the the of by human capital directly on the in the a of capital of returns to human capital returns to human capital in a a the of a human capital to than in economy of and that of to the the regional wage directly or of returns to human capital not the of the of and and the of to the of the wage gap in that human capital in the two to location This the the East less and individuals in the East and West in of in the of regional and to in the two German in the that the wage gap that to location in the as in regional the and in the West to the of German in a as the of a in Germany in the to a of Eastern the the assimilation and to a of the German wage gap. assimilation in the of to the wage between and This on the that human capital in a less than This a of the and and to to the possibility that and in a economy not as in a as and in a to human capital and not to of to to of and in the and directly a wage for human capital by does not by the same as for two to a and human capital and for the assimilation a process of where the wage to as and in the that than of a the after the in returns by human capital depreciation in the of the assimilation to Germany that human capital in the of less in the economy of Germany than human capital in the Numerous by the in returns to human capital by Eastern Germans. of East human capital after reunification and that not to the same of human capital as and the of in the former economy of the in the transition process to a by and in the of to the depreciation of human capital account for the wage gap between Easterners and Western that the wage gap between two in the as Easterners to the of the and to Westerners in of the of the German the wage differential a of of to the years after This the that the gap between East and West the effect of reunification on in the two to on to and the returns to human capital in the East transition process a the that in the of in the former to reunification East Germany a wage to the West German the were not directly to West Germany the West German by and of in the to the of human capital such as and and the of and for aspects of human that after the transition to a the to to in East human capital of the in the and on wage and in East and West East German between and by in that occurred the of the by between and for the of to and of and in the and the West, the returns to were in East returns to in that and that were not the in East and to and in the and to the wage to in to of and in not in the returns to were and to after that differing of to endowments, and not were the of the wage East Germans the same returns to as West Germans in 1990, by that the of returns as a of human capital and not wage and the wage gap a after the two of Germany the that in the of between and and the wage the two years in by a in the of between and and of wage in the account for that and for and in that were by in the former substantially after the effect of a for human after and human capital not in East Germany after reunification, the in wage in the East to in the returns to that in the East German and the in the returns to and in the two regional the of that the East to the that the returns to in the East and West, still substantially in the East years after This the for and returns to in the and that the in returns to between Easterners and Westerners to by in the of to a of the of in the East German differing in or to the in the West German the between the East and West wage to regional as in and regional and not a of between Easterners and and the of the wage to the location or the and East Germans in West Germany of East that the that were for in West Germany in East Germany as that the returns to and in the two the human capital depreciation for the returns in the East after reunification, the in returns between the East and West to as Easterners to the of the and and that human capital depreciation in the wage gap. and of a wage gap the two returns to in and the wage differential as the of a location effect in the the the East not the West to and capital that Eastern to the West a wage of the that in and not in human capital endowments, that the gap between Eastern and Westerners the of a effect in Eastern less than Eastern wage for Easterners to the West to in than by two the wage gap between East and West that the between in Eastern and Western Germany in to the of and in on the institutional that in the of the East German economy and and to the of and in the East and West, to the and in that the of East Germany process in the of and in the East and in and to in the by that to and in the East as part of regional to regional and a to the German wage gap and the and on in and regional and to wage and the that of the wage gap the by in and regional and in by that between the East and the West that that Eastern West German in the years to of the the that the endowment effect, a in the wage gap. wage gap between the two as human capital depreciation or as a location for the the German a of and in the Republic of Germany in and to the in the of the and human capital and individuals on individuals German to years of living in German territory and after the by human capital depreciation for Easterners were in the former communist the to individuals reunification individuals no on or human capital to in on the of in the of to not to the of in in the the of where by and by the While a in the wage the does not for in the of the in the returns to or on the the to a the same This differential to returns for the two for the possibility that the two that the Easterners and Westerners the same returns of the that the the wage differential to as This in the for the gap and in the same the same the same and to for in a the reunification of two in Germany in a where differential returns to between Easterners and Westerners than two of the location effect and human capital after reunification by the and and of by the and the for the East, the the wage gap by returns for Easterners living in the East to Westerners living in the This the part of the differential that still for after the location effect for the endowment effect in the for Western Germany in a for Easterners and Westerners living in the in the that human capital depreciation the of reunification returns to and to in the the assimilation by a for the German not human capital for the differential A the as the of Easterners to to the to a in the differential the depreciation of human capital for the in the and by were the to by and This by the to in the East and the West the location effect to to the effect of human capital depreciation the the of the differential that by human capital and in the the in the the in returns for by human capital the differential in the as Easterners to the the the and the in the in on the the that human capital depreciation for the wage gap. of the of the that the in of between two of the wage in to a of the wage differential between Eastern and Western the the and wage the and the that the of on a of the on of the of the the that that not or in a or to of the to the to the and a to the in the wage a of in and in the of the of on to the wage the wage on the of and the for the of in to a of the that in the of to the and to the of on the and the the to the the in the to the of to and for the of and the between the of between two a part by and a part by the returns to to and the the of as does not on A the of on the of the by and This a where a wage effect and a effect a and two the of the of of for and to the of to the effect the of a effect, the effect in a in the of a to the the the for the This for the of the of on to the wage the between the of between East and West Germany a part by in wage and a part by the in returns to two not the of the the not in in to the of the regional wage wage by to and by to by the of the the of still and to the of wage the of the wage differential between Easterners and Westerners in a wage as the and a regional as the of the on Easterners earn less than Western This to a wage gap of than a in and a in the the in the wage of the two the and the of for the wage gap to and the of the While the wage gap and the in the two to a and wage differential between Easterners and not to the wage gap of the wage gap the isolates the that to in human capital the the possibility of a location and in the the of the wage gap to for the of human capital the that Easterners less human capital a for years of and a for a for years of and the of that in and of the the of to the part of the wage gap that to in and in the returns to the a of that the human capital of and that and regional of by the and on human and to the effect of and two of human capital the years of and of in the years of and and or for by of to part to and the that by of for in the wage such as and not to and for Easterners and the of the wage of the the of two in the the of for the Eastern than for the Western While the in paper for to the of the in remains the the wage gap that the of the wage gap that to in and the of the wage gap that by returns to human capital With a gap of the the differential to the and to the the wage gap the wage the gap remains between and wage differential the than the in human capital a of the wage gap the and the in between Easterners and Westerners not the the less account for of the wage the for the and the and of the wage gap that by in not than less to the endowment effect does not account for than of the wage gap. in returns to the for Easterners the the same for human capital as by between the and the of the wage by the of wage that in returns to endowments, not in for the gap in the in the of the wage the wage the to as of differential for by in the between Easterners and were Easterners the same as a wage of for and a wage of for to the the endowment effect a part of the wage differential the wage for Easterners in part of the in returns the to Easterners the same returns to as Westerners by in returns to account for than of the wage gap. the the that in returns to to a While the wage the that in returns to the of the differential the of the wage gap the and and the in returns to the not in the two two to less returns to in the East or the in the former less in the capital by the of the wage differential to returns to human capital and not to in While and that regional in capital or a wage to the by the that the location effect the returns to human capital in the the wage in the East and the West in between and that or of the wage gap to the location that individuals in the in the same in and that regional a in not to the location effect a wage by individuals of that individuals to as not the same as individuals living in the East in to after reunification as individuals to in regional and by in regional as by a of wage the to and by the location effect, the by and the of Easterners living in the West of Westerners living in the West a the same for the location effect the individuals the same the the wage gap between Easterners and Westerners after in the two the of the not to the West and the East the for individuals living in the Easterners settled in the West earn less than Westerners in the same the differential in the West in the to the individuals living in the West, Easterners less human capital endowment by as to Westerners the and the the the part of the wage gap after endowment and location Easterners in the West the same for as Westerners in the West, by a of the and by a of the that the in returns substantially individuals settled in the West the the differential to Easterners to Westerners the same that Easterners in the West less for human capital than Westerners in the West, a wage gap of that by differential or location for the for individuals living in the East in to the for the West, the wage between Easterners and Westerners in the East in the and to the the Easterners in the East earn less than Westerners in the same a than the wage gap of in the in part of differential in the Eastern less human capital than the for a wage gap of wage differential between Easterners and Westerners living in the East to in returns to human capital Eastern were for as by the by the to the in returns the wage gap between Easterners and Westerners in the East after in regional substantially than the for the between Easterners and Westerners in the a location effect does the in returns between Easterners and Westerners the in the West, and in the by a the the as a A location effect the in the West and the East than the differential the in This the for the and the two the differential in the East than the location effect a in the of the wage not in the after for location effect, a wage gap remains and in the East and the This in and the that returns for Easterners a wage in the West, a in the than endowment or location not for the wage gap in the human capital depreciation the returns to endowments, and effect in the East than in the depreciation of human capital the in returns to human capital for the by Easterners in the less for in the than by Westerners in the the by to after reunification and the in returns to to as in the East of the by human capital depreciation by on the in the returns to human capital the in for the West and the East to that the of human capital depreciation the location effect, capital depreciation to to Easterners were and in the former communist were the not wage effect to human capital the former communist for by the and the by as the for the East in the in returns between Easterners and Westerners living in the West for the by in returns in a for the differential to in Easterners in the West a wage to Easterners in the West the wage the A that Easterners than and human capital depreciation the of the in returns between the two in the West the the wage gap in to in of the to the of to Western the human capital While the wage gap to in returns to human capital of differential by the to the the that in human capital to the of the a the that for the wage gap by returns to to in and that in the the and the differential as human capital depreciation for the part of the wage gap. differential of the in of and human capital that not in the the in the East for the same by and in returns to human to the for the West, the differential to human capital depreciation Easterners a for the differential the the wage gap in to in of the in the in returns in as the assimilation to human capital in the West, not and This to the of the and the of not as in the East as in the This by the the in the East and the West the in the of the in the and the in for the East to the that the differential between Easterners and Westerners and for the the differential in the East years for the East to the that the West in for in the in returns in the East that assimilation of Easterners effect in the East that the in the two to no the that the differential between Easterners and Westerners in the East to human capital by the same in the of reunification, the that the wage gap in the East not by in endowments, location effect, and human capital of a wage gap between Easterners and in the East, for two in and and and capital the two the West to the East after Eastern Germans still less than Western While paper does not of the wage gap for by the a for to the of the wage gap between Easterners and Westerners in the to regional to on the of institutional systems regional to between and and between and This and that in the regional wage gap. the of the wage differential to in or between Easterners and where to as the to and in regional the and to to on the wage and of the German reunification the of While the in in the East, by the still the in that in the East to the in and not While as a in the as to remains in the East, and not between the East and West, in the East less than in the This to regional in such as and and as the of the in the that the less in the East not to the of that by to the of or that the West to the to in the East, to the same of in the East as in the for in the East remains than in the West the of East German that the to privatization in the years after reunification for and the privatization process in a where a of the in the East in the West, and and the of and of were in the West, as were of the for and and East German the of in between the two in the wage gap not in not a part of the wage gap. and that of the wage gap to in of such as that between and to a and that the of and account for of the wage gap. of the wage gap the to in the of the of of that between the East and the West that East German not West German in the years to a the that the wage differential to the of the that and of the wage This that on to the wage gap than regional a in that not for regional as institutional to regional or to the of regional on to the of a in and of the of the and systems of This regional to that and in regional that and capital as for regional as the of regional and years in the as a of the of the regional as a for the of regional This in regional in the of capital and capital that the of capital in a the that regional where and human A a and institutional in to to and a to the that a of to for a the of the of regional in as to that for for regional where and for regional and systems regional in the on the of where a by on and human the of the wage that in the of not to in the wage gap between Easterners and that in the or of the two in for in the East, or in that and in and and of the gap between the East and the This as part of regional to regional in the East of in and regional in the East the regional in the location of and and of of and to in the This to the East, in such as and the in in and the of in the East by regional location the of and in the East the of in the and the of by Eastern a and in the of wage Easterners and the of and human regional to the by Easterners the depreciation of human and in the returns to human capital between Easterners and This and of the wage for to in to and and and the of Easterners in the the that regional in the East that and the for the of Eastern and the wage gap between the two a quarter of a century after the reunification of still a wage gap between Eastern and Western Germans. This rapid the and to the of the still regional in the wage This paper revisits the German wage gap years after reunification and the wage differential the the gap in and in the returns to that a part of the wage gap by in endowments, in the returns to a part in the wage gap. transition to a economy the wage on and the in the economy that not to the same of human capital as that the of between East and West the possibility of a location effect by by While the in returns between Easterners and Westerners settled in the West and than the in the East the differential than the the and that wage Easterners by the less regional in the to the in the returns to human capital between Easterners and Westerners to the depreciation of human for the of that the depreciation of human capital the of reunification not and still Eastern Germans years in the the jointly to account for the wage differential between Easterners and Westerners in the West, not the in the as part of the wage gap in the East the for the of the wage gap between East and West the of wage gap a quarter of a century after reunification does to the that transition in than and that regional wage not a

Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.