East Germany´s Wage Gap : A non-parametric decomposition based on establishment characteristics

East German wages have been below the West German wage level since unification. Moreover, the East-West wage gap implied by the contractual wagesspecified in collective wage agreements is drifting ever further apart from the wagegap in terms of effective wages. This paper looks at the role of establishment-specific factors - such as sectoral affiliation and size of the labourforce - in this process. A non-parametric decomposition that has played aprominent role in the gender wage-gap literature is applied to breakdown the East-West wage gap into its constituent components...