On regional convergence in a transitional economy: the roles of migration and wages.

The role of migration in influencing convergence between regions at different levels of economic development is analyzed using the example of Germany following reunification, with particular reference to the impact of migration on wages. "Several ways of regional wage formation are investigated, among them a full employment wage mechanism as well as a fast regional convergence of wages which is independent of productivity movements. The conclusion is that the impact of wage mechanisms on the convergence of per capita output is ambiguous. However social costs in terms of unemployment are high in case of a wage adjustment which is regardless of productivity growth." (SUMMARY IN GER)