DP3201 Participation Behaviour of East German Women After German Unification

Author(s): Holger Bonin, Rob Euwals
Publication Date: February 2002
Keyword(s): labour force participation, panel data, transitional economies
JEL(s): C33, J21, J31
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3201

The Paper studies the determinants of labour force participation by East German women after unification. To isolate the role of preferences on labour force participation from individual characteristics, we develop a panel data model that simultaneously explains participation, employment and wages. The model, estimated for East and West Germany on the basis of the German Socio-Economic Panel, indicates that distinct preferences could explain the regional difference in participation rates at unification. Afterward East German women became less willing to participate, but the negative labour supply trend was offset on the aggregate level by changes in characteristics and wages promoting participation.