Journal article


The caring hand that cripples: The east german labor market after reunification


Publication Details
Author(s): Merkl C, Snower D
Publisher: American Economic Association
Publication year: 2006
Volume: 96
Journal issue: 2
Pages range: 375-382
ISSN: 0002-8282

Abstract

The East German labor market has hardly made any progress since German reunification, despite massive migration flows and support from the West. We argue that East Germany is in trouble precisely because of the support it has received. This paper explores the phenomenon of "the caring hand that cripples," arising from bargaining by proxy, the adoption of the West German welfare system and the associated employment persistence. Even the steady decrease of labor cost (normalized by productivity) since the beginning of the nineties did not help to kick start the East. We suggest that labor force participants fell into "traps," concerning low skills, ageing of the workforce, labor-saving capital and skills, capital underutilization, and unemployment arising from the decline of the tradable sector.



Focus Area of Individual Faculties


How to cite
APA: Merkl, C., & Snower, D. (2006). The caring hand that cripples: The east german labor market after reunification. American Economic Review, 96(2), 375-382. https://dx.doi.org/10.1257/000282806777212314

MLA: Merkl, Christian, and Dennis Snower. "The caring hand that cripples: The east german labor market after reunification." American Economic Review 96.2 (2006): 375-382.

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