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Title: |
Minimum Wages and Employment: The Case of
German Unification |
| Author: |
Heitger, Bernhard |
| Author
Affiliation: |
Kiel Institute for World
Econ |
| Source: |
International Economic Journal, Spring 2003, v. 17, no. 1, pp. 1-15 |
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Publication Date: |
Spring 2003 |
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Abstract: |
Analysis in terms of the
two-sector open economy shows that in bringing the market economy to
East Germany, West Germany seems to have disregarded important
fundamentals. Premature formation of a currency union led to a
substantial real appreciation of the East German currency. Premature
implementation of the West German system of wage bargaining resulted in
inappropriate minimum wage schedules. Both measures made East German
production possibilities and employment decline. |
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