East-West Migration in Germany - An Analysis of Wage Differntials

Abstract: This paper examines the income differentials and characteristics relevant to the labour market of East-West migrants, West Germans and East-German stayers in Germany in 2006. This is done by using descriptive statistics as well as regression models based on the Human Capital theory by Becker and Mincer. The data used in this paper comes from the Socio-Economic Panel (SOEP) of the German Institute for Economic Research. The results show that there is persistent income differential between East and West Germany and that there are differences in the returns to human-capital as well as personal characteristics for the three groups studied. The data also shows that there is a self-selection of migrants. The group of East-West migrants showed an over-representation of women, young people and individuals with a medium level of education.