Staunching Emigration from East Germany: Age and the Determinants of Migration

Following the unification of Germany in 1990, eastern wages and unemployment both rose rapidly. I demonstrate that rising wages reduced eastern emigration greatly, while rising unemployment had little effect. This reflects the behavior of the young, who are very sensitive to source region wages, and relatively insensitive to source unemployment. I show that most of the effect of source unemployment comes from the contemporaneous effect on those laid-off, who are more likely to be older. I find that, compared to stayers, young emigrants are much more skilled, older emigrants are slightly more skilled, and commuters are not more skilled, as measured by education and pre-move wages. My conclusions are based on a comparison of results from aggregate inter-state migration data and individual data from the eastern sample of the German Socio-Economic Panel for 1990-2000. (JEL: J61, P23) (c) 2006 by the European Economic Association.