Eastern Germany Since Unification: Wage Subsidies Remain a Better Way

  • David Begg
  • Richard Rortes


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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Copyright information

© Springer-Verlag · Berlin Heidelberg 2001

Authors and Affiliations

  • David Begg
    • 1
    • 2
  • Richard Rortes
    • 2
    • 3
  1. 1.Birkbeck CollegeLondon
  2. 2.CEPRLondon
  3. 3.London Business SchoolLondon

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