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The Response of Household Saving to the Large Shock of German Reunification

German reunification was a large, unexpected shock for East Germans. Exploiting German reunification as a natural experiment, I analyze the validity of the life-cycle consumption model. I derive three stylized features concerning the saving behavior of East versus West Germans after reunification: (i) East Germans have higher saving rates than West Germans; (ii) this East-West gap is increasing in ...

On preferences for being self-employed

The concept of procedural utility assumes that agents not only receive utility from outcomes but also attach an independent value to the procedures that lead to these outcomes. This paper analyzes whether the preferences that underlie procedural utility are homogeneous using the case of independence at the workplace. I exploit the event of German reunification to assign preferences for independence ...

Participation Following Sudden Access

The German reunification experiment provided sudden access to previously unavailable financial products, supported by knowledgeable practitioners. This setting offers new perspectives on participation, inertia, and product diffusion. Controlling for characteristics, East Germans experienced a jump in securities participation to a level comparable to West Germans’ participation immediately following ...

Explaining the low labor productivity in East Germany – A spatial analysis

This paper sheds light on the transferability of human capital in periods of dramatic structural change by analyzing the unique event of German reunification. We explore whether the comparatively low labor productivity in East Germany after reunification is caused by the depreciation of human capital at reunification, or by unfavorable job characteristics. East German workers should have been hit harder ...

Inequality trends for Germany in the last two decades: A tale of two countries

In this paper we first document inequality trends in wages, hours worked, earnings, consumption, and wealth for Germany from the last twenty years. We generally find that inequality was relatively stable in West Germany until the German reunification, and then trended upwards for wages and market incomes, especially after about 1998. Disposable income and consumption, on the other hand, display only ...

The Savings Behavior of East and West Germans - Theoretical Predictions and Empirical Evidence

Precautionary Savings and Self-Selection: Evidence from the German Reunification 'Experiment'

Who stays, who goes, who returns? East–West migration within Germany since reunification

We study the determinants of East–West migration within Germany during the period 1990–2006, using administrative data, the German Microcensus and the German Socio-Economic Panel. We find that in addition to income prospects and employment status, two well-known determinants of migration, psychological and social factors play an important role in determining the migration decision. Men and women move ...

Solidarity with EU Countries in Crisis: Results of a 2015 Socio-Economic Panel (SOEP) Survey

In response to the European sovereign debt and currency crisis, the EU has begun to implement measures toward fiscal solidarity at least for the euro area. Survey data from the Socio-Economic Panel (SOEP) study show that just under half of all adults in Germany generally support providing assistance to EU countries experiencing financial difficulties. Almost one in three respondents also advocate the ...

Occupation, Prestige, and Voluntary Work in Retirement: Empirical Evidence from Germany

The paper examines the extent to which the prestige value of a retiree’s former occupation increases the likelihood that they will make a transition into volunteering after retirement. Following social production function theory, we assume that when a person retires, the prestige value attached to their former occupation fades. The fact that volunteering has the character of a collective good provides ...