TY  - JOUR
AU  - Sinn,Hans-Werner
TI  - Germany's Economic Unification: An Assessment after Ten Years
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7586
PY  - 2000
Y2  - March 2000
UR  - http://www.nber.org/papers/w7586
L1  - http://www.nber.org/papers/w7586.pdf
N1  - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
AB  - A political miracle occurred when Germany was reunited, and at first glance an economic  miracle has  followed. Real incomes in the east have now reached the western level, and investment per capita has been much higher than in the west. However, every third deutschmark spent in the east has been coming from the west, investment in equipment has fallen below the west German per capita level, and convergence seems to have come to a halt at an overall labor productivity of only 55% of west Germany. Excessively high wages coupled with investment incentives that made the cost of capital negative rank high among the possible explanations. This paper describes reforms of the labor market that could help to make convergence continue.
ER  -