Kiel Working Papers, Kiel Institute for World Economics
No 1045:
Minimum Wages and Employment: The Case of German Unification
Bernhard Heitger
Abstract: Analysis in terms of the two-sector open economy shows
that in bringing the market economy to East Germany, West Germany seems to
have disregarded important fundamentals. Premature formation of a currency
union led to a substantial real appreciation of the East German currency.
Premature implementation of the West German system of wage bargaining
resulted in inappropriate minimum wage schedules. Both measures made East
German production possibilities and employment decline.
Keywords: Minimum Wages, Employment, German Unification; (follow links to similar papers)
JEL-Codes: E24; P23; (follow links to similar papers)
23 pages, May 2001
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