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Regional economic integration and factor mobility in unified Germany

Böhm, Sebastian

(Working Papers SES ; 463)

The massive movement of capital and labor in opposite directions is the most striking characteristic of economic integration of Eastern and Western Germany. Beyond that, wage-setting behavior during the early years of unification and massive public social transfers have affected the transition path of the Eastern economy. In this paper, I set up a two-region open economy model with capital and...