Abstract

In this project, we study the evolution of wage mobility in Eastern Germany before unification and during the transition from a centrally planned to a market economy. We plan to exploit German pension register data that recently have become available and provide full longitudinal information on the pension-relevant biographies of a 1%-sample of individuals aged 15 to 67 up to the year 2007. Against the background of a strongly regulated, compressed wage structure and restricted occupational choices, we hypothesize that the selection into low wage employment in the GDR is unlikely to be fully explained by productivity differences but might have been driven by additional factors such as political discrimination. To address this hypothesis, we look at whether longer employment interruptions may help explain the low-earnings status. When analyzing the degree of persistence of low-wage employment, particular emphasis will be given to the extent of “genuine” state dependence of GDR low-wage employment in the pre-unification period as well as during the transition from a centrally planned to a market economy.