This paper provides a brief overview of the East German employment problem and presents a simple model in which to evaluate two rival policy proposals: wage subsidies and revenue-sharing subsidies. Revenue-sharing subsidies have received little, if any, attention in the ongoing public debate on...

Motivated by the process of economic development in Eastern Germany since the German reunification we set up a dynamic macroeconomic model of a small open economy where both capital and labor are mobile and there are increasing returns to scale at the aggregate level. The model features multiple...

The paper analyses the theoretical and empirical relationship between employment, skill structure and innovation in East and West German manufacturing firms. The econometric part builds on firm data from the Mannheim Innovation Panel 1993, 1994 and 1995. In the German industrial sector,...