The caring hand that cripples
Subtitle: the East German labor market after reunification (detailed version)
By: by Dennis J. Snower, Christian Merkl
Contributors: Merkl, Christian
Series: Discussion paper -- no. 2066; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2066
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] :
Subjects: Labor market; Subsidies; History
Description: "The East German labor market has hardly made any progress since German reunification, despite massive migration flows and support from the West. We argue that East Germany is in trouble precisely because of the support it has received. This paper explores the phenomenon of "the caring hand that cripples," arising from bargaining by proxy, the adoption of the West German welfare system and the associated employment persistence. Even the steady decrease of labor cost (normalized by productivity) since the beginning of the nineties did not help to kick start the East. We suggest that labor force participants fell into "traps," concerning low skills, ageing of the workforce, labor-saving capital and skills, capital underutilization, and unemployment arising from the decline of the tradable sector"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 4/6/2006.

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