Eastern Germany Since Unification: Wage Subsidies Remain a Better Way
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German unification, according to Bismarck, was achieved by blood and iron. Over a century later, the reunification of Germany in 1990 was secured without war, but blood has again been shed: the economic cost of unification has exceeded all expectations. In this chapter we argue, that the policy response to unification has been inappropriate, and hence unnecessarily expensive; the adoption of a universal, temporary wage subsidy in Eastern Germany would have been the preferred solution (Begg and Portes (1991).
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- Eastern Germany Since Unification: Wage Subsidies Remain a Better Way
- Book Title
- Employment Policy in Transition
- Book Subtitle
- The Lessons of German Integration for the Labor Market
- Book Part
- pp 140-153
- Print ISBN
- Online ISBN
- Springer Berlin Heidelberg
- Copyright Holder
- Springer-Verlag Berlin Heidelberg
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- Editor Affiliations
- 1. University of Munich
- 2. Department of Economics Birkbeck College, University of London
- 3. Institute for the Study of Labor (IZA)
- Author Affiliations
- 4. Birkbeck College, London
- 5. CEPR, London
- 6. London Business School, London
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