Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17838
Authors: 
Uhlig, Harald
Year of Publication: 
2007
Series/Report no.: 
Kiel Working Paper 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

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