Career paths of PhD graduates in Eastern and Western Germany: Same qualification, same labor market outcomes?

This paper investigates the extent to which the returns to gaining a PhD degree depend upon the region of birth, the region where the degree was earned, and the place of work. Eastern Germany serves as an interesting showcase in light of the ongoing debate surrounding the underrepresentation of eastern Germans in top positions in Germany. We examine the career paths of eastern and western German PhD graduates who completed their dissertations between 1995 and 2010. We estimate the returns with regard to obtaining a job suited to their skill level and with high wages. Our data set combines information on PhD graduates and their place of birth collected from data on PhD dissertations in Germany with data from administrative social security records. This record linkage approach provides a unique source of individual employment and wage biographies of eastern and western German PhD graduates. Our findings show that labor market success is affected neither by being born in eastern Germany nor by earning a PhD at an eastern German university. However, the place of work does matter, suggesting that the stark differences between the two parts of Germany with regard to labor market conditions is the main reason for the differences in the labor market prospects of PhD graduates from eastern and western Germany.