Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification
Year: 2006
Type: article
Abstract: Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year olds are leaving East Germany, and that the emigration has accelerated in recent years. To understand these patterns, I provide an extension of the standard labor search model by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration (West Germany) and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration (East Germany). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.
Source: American Economic Review
Author: Harald Uhlig
Institution: Humboldt-Universität zu Berlin
Language: English
Topic: Migration and Labor Dynamics
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3122234571