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The unification bonus (malus) in postwall Eastern Germany

Author

Listed:
  • Beblo, Miriam
  • Collier, Irwin L.
  • Knaus, Thomas

Abstract

This paper presents estimates of the unification bonus for East Germans over the period 1991 to 1998. The unification bonus is defined as the discounted value of the difference between a person?s actual income and his or her counterfactual real income stream forecast for a hypothetical continuation of economic life in a static GDR. The two main issues tackled in this study are the construction of valid deflators for a comparison of real incomes during the transition from a centralized to a market economy and the estimation of plausible counterfactual income streams. Our central result is that 19 percent of East Germans received a present value malus and so can be regarded as unification losers but that the aggregate bonus is ten times the size of the aggregate malus of the sample.

Suggested Citation

  • Beblo, Miriam & Collier, Irwin L. & Knaus, Thomas, 2001. "The unification bonus (malus) in postwall Eastern Germany," ZEW Discussion Papers 01-29, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5384
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    References listed on IDEAS

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    1. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
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    7. Markus M. Grabka & Birgit Otto, 2001. "Angleichung der Markteinkommen privater Haushalte zwischen Ost- und Westdeutschland nicht in Sicht," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 68(4), pages 51-56.
    8. Richard Hauser & Holger Fabig, 1999. "Labor Earnings And Household Income Mobility In Reunified Germany: A Comparison Of The Eastern And Western States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(3), pages 303-324, September.
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    11. Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, December.
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    Cited by:

    1. Michael C. Burda, 2006. "Factor Reallocation in Eastern Germany after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 368-374, May.
    2. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
    3. repec:diw:diwwpp:dp1269 is not listed on IDEAS
    4. Jan Goebel & Peter Krause & Joachim R. Frick & Markus M. Grabka & Gert G. Wagner, 2010. "Eine exemplarische Anwendung der regionalisierten Preisniveau-Daten des BBSR auf die Einkommensverteilung für die Jahre 2005 bis 2008," SOEPpapers on Multidisciplinary Panel Data Research 284, DIW Berlin, The German Socio-Economic Panel (SOEP).

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    More about this item

    Keywords

    Real income comparison; income distribution and mobility; economies in transition;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D1 - Microeconomics - - Household Behavior
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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