DP615 | Labour Mobility and German Integration: Some Vignettes

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Several alterantive scenarios for the economic integration of East and West Germany are analysed. They all share an amphasis of the rile of migration and labor mobility in this process. The effects of congestion costs, rigid wages, human capital and heterogeneity of migrants, and endogenous growht type externalities are studied in a series of simple models. The common thread is that there may be a scope for intervenionist policies. They need not necessarily involve subsidies to employment.