From Reunification to Economic Integration
0332-02-Burda 1/3/02 15:29 Page 1 MICHAEL C. BURDA Humboldt-Universität zu Berlin JENNIFER HUNT University of Montreal From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany IT IS DIFFICULT TO FIND A MORE dramatic episode of economic disloca- tion in peacetime during the twentieth century than that associated with the reunification of Germany. It is a sad irony of history that the plucky East Germans who toppled the dictatorship of the proletariat in the bloodless revolution of 1989 were rewarded with an economic bloodletting on such a vast scale. From 1989 to 1992, GDP in the former German Democratic Republic declined by roughly 30 percent, value added in industry by more than 60 percent, and employment by 35 percent. During the same period, unemployment rose from officially zero to more than 15 percent. That figure, moreover, is based on registered unemployment only; joblessness For excellent research assistance we thank Silke Anger, Almut Balleer, Anja Schneider, and Nils Schulze-Halberg, as well as Bianca Brandenburg, Anja Heinze, and Tom Krüger. We received helpful comments from Patricia Anderson, Antonio Ciccone, Helmut Seitz, Harald Uhlig, Holger Wolf, Janet Yellen, and participants at the Brookings Papers confer- ence. We received valuable data from Martin Rosenfeld, Rupert Kawka, Harald Kroll, and Udo Ludwig (all at the Institut für Wirtschaftsforschung, Halle), from Bernd Seidel, Dieter Vesper, and Erika Schulz (all at the Deutsches Institut für Wirtschaftsforschung), from Steffen Maretzke (Bundesamt für Bauwesen und Raumordnung), from the state statistical offices of Saxony and Mecklenburg-Vorpommern, from the Federal Statistical Office (Sta- tistisches Bundesamt), and from Irwin Collier.
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