Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24830
Authors: 
Merkl, Christian
Snower, Dennis J.
Year of Publication: 
2008
Series/Report no.: 
Kiel Working Paper 1435
Abstract: 
This paper indicates that East Germany's unemployment originates primarily in the labor market, caused by the fast wage adjustment after German reunification. We model the resulting labor market traps in a search and matching framework, show that they are difficult to overcome, and provide empirical evidence. We argue that under these circumstances, demand-side policies are effective mainly when they increase the economy's overall productivity and thereby help overcome the labor market traps.
Subjects: 
Unemployment
labor market trap
East Germany
JEL: 
E24
J30
J64
P2
Document Type: 
Working Paper

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