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Does low‐pay persist across different regimes? Evidence from German Unification

Gürtzgen, Nicole ; Diegmann (né Nolte), André



Abstract

Using German administrative data, we study across-regime low-pay persistence in the context of an economic transformation process. We first show that individuals' initial allocation to the post-unification low-wage sector was close to random in terms of market-regime unobservables. Consistent with a weak connection between individuals' true productivity and their pre-unification low-wage status, ...

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