Resource title

East German unemployment : the myth of the irrelevant labor market

Resource image

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Resource description

This paper indicates that East Germany's unemployment originates primarily in the labor market, caused by the fast wage adjustment after German reunification. We model the resulting labor market traps in a search and matching framework, show that they are difficult to overcome, and provide empirical evidence. We argue that under these circumstances, demand-side policies are effective mainly when they increase the economy's overall productivity and thereby help overcome the labor market traps.

Resource author

Christian Merkl, Dennis J. Snower

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24830

Resource license

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