Working Paper: CEPR ID: DP652
Authors: Michael Burda; Michael Funke
Abstract: The rapid wage increases observed in Eastern Germany over the past two years have important implications for the direction taken by structural change in this region. These implications are not solely negative, and remain controversial in the public debate. This paper discusses four aspects of a `high wage policy' on the economic assumptions necessary to generate them.
Keywords: Germany; Trade Unions; High Wage Policy
JEL Codes: E24; J38; J51; J58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high union wages (J51) | slower structural adjustment (E69) |
| high wages (J31) | increased investment in skills (J24) |
| high wages (J31) | enhanced productivity (O49) |
| collective bargaining (J52) | high union wages (J51) |
| slower structural adjustment (E69) | employment dynamics in the unionized sector (J59) |