Kiel Working Papers, Kiel Institute for World Economics
No 1306:
What kind of shock was it? Regional Integration and Structural Change in Germany after Unification
Michael C. Burda
Abstract: Eastern Germany’s recovery from the “unification shock”
has been characterized by deep structural change – with apparent
repercussions for the West as well – and an integration process involving
both capital deepening (extensive and intensive investment) and labor
thinning (net out-migration). I propose a constant-returns neoclassical
model of economic integration which can account for these facts. Adjustment
costs determine dynamics and steady state regional distribution of
production factors. The model also explains persistent wage and capital
rate-of-return differentials along the equilibrium path. Under competitive
conditions, observed factor price differentials contain information on
those adjustment costs.
Keywords: German reunification, regional integration, costs of adjustment, capital mobility, migration; (follow links to similar papers)
JEL-Codes: F2,; J61,; P23; (follow links to similar papers)
26 pages, January 2007
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Downloadable files:
kap1306.pdf
Download Statistics
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design Joakim Ekebom