Resource title

Regional labor markets, network externalities and migration : the case of German reunification

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image for OpenScout resource :: Regional labor markets, network externalities and migration : the case of German reunification

Resource description

Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year old are leaving East Germany, and that the emigration has accelerated in recent years. To understand these patterns, I provide an extension of the standard labor search model by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration (?West Germany?) and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration (?East Germany?). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.

Resource author

Harald Uhlig

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/17838

Resource license

Adapt according to the presented license agreement and reference the original author.