Employment Policy in Transition : The Lessons of German Integration for the Labor Market

The book summarises the major lessons from the East German labor market in transition and puts them into context with the first experiences in the other transition countries. After an introduction to the subject and an overview of labor market developments in East Germany, part 1 of this volume turns to specific issues of adjustment: wage trends, business start-ups, and early retirement. Part 2 reviews the policy options available in the transformation process and their labor market implications: wage subsidies, profit sharing, invested pay, further education, and various forms of active labor market policy. The final chapter draws parallels with the experience of other transition economies. Front Matter....Pages I-VI Introduction....Pages 1-7 The Post-Unification German Labor Market....Pages 8-30 Wages and Structural Adjustment in the New German States....Pages 31-51 East/West-Wage Rigidity in United Germany....Pages 52-82 Early Retirement in East and West Germany....Pages 83-102 Employment Effects of Newly Founded Businesses in East Germany....Pages 103-124 Earning Dynamics in the East German Transition Process....Pages 125-139 Eastern Germany Since Unification: Wage Subsidies Remain a Better Way....Pages 140-153 Economic Efficiency and Social Acceptance of Wage Subsidies....Pages 154-171 Revenue-Sharing Subsidies as Employment Policy: Reducing the Cost of Stimulating East German Employment....Pages 172-191 Investment Wages and Capital Market Imperfections....Pages 192-207 Public Sector Sponsored Continuous Vocational Training in East Gemany: Institutional Arrangements, Participants, and Results of Empirical Evaluations....Pages 208-253 Active Labor Market Policies in Central Europe: First Lessons....Pages 254-293 Back Matter....Pages 294-302 A historically unique experiment is about to enter its second decade - German unification. Early hopes for a rapid and smooth economic transformation soon turned out to be overly optimistic. Despite massive financial transfers, the political promise of a "blooming landscape" remains a vision. Actual developments have left deep scars on the labor market, and the effects will be felt for decades to come. Was this outcome to be expected, perhaps even inevitable? What went wrong, and what were the available options? Or is the current state of Eastern German labor market in fact better than is commonly assumed? The unification of Germany has been described as "the gift of the century."