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Title:Regional labor markets, network externalities and migration : the case of German reunification PDF Logo
Authors:Uhlig, Harald
Issue Date:2007
Series/Report no.:Kieler Arbeitspapiere 1311
Abstract: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.
Subjects:German reunification
labor market search
network externalities
migration
regional economics
JEL:J24
J64
J61
J11
J21
E24
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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