Geoscience Reference
In-Depth Information
western states was about 9%. The range for unified Germany was about 14%.
More importantly, the spatial concentration of unemployment also changed:
the lack of work was particularly intense in those states with the lowest levels
of GDP per capita, that is to say, in those states with the smallest tax bases to
finance income transfers in favor of large contingents of dependent population.
This strong correlation between low income per capita and high unemploy-
ment did not exist in 1989. In turn, the combination of changes in both the
spatial concentration of unemployment and aggregate levels of income across
territories is bound to reshape the geography of the incidence of inequality
across territories.
Overall, Reunification implied an increase in the distance between regions in
terms of income, the size of their dependent populations (
α
), and the incidence
of or risks associated with economic specialization (
). The new members of
the union have a dysfunctional economic structure, with very different guid-
ing principles to allocate goods and services. The merging of a social market
economy in the West and a state driven economy in the East produced a more
heterogeneous economic geography.
In addition, the merging of two economic areas with such divergent perfor-
mances opens the door for people to seek either better wages or better benefits.
As a result, the risk of a massive inflow from East to West, either of dependents
or working age citizens, was a primary concern for policy makers from the very
early stages of the process (Streeck
2009
; Wiesenthal
2003
). According to this
topic's argument, these concerns demand an effort by the federation to bring
the eastern l ander to terms with the union, thus insuring the western against
potential negative externalities.
To be sure, Reunification added intense pressure to the system of interre-
gional redistribution. To convey the magnitude of this new pressure,
Table 6.3
shows how the system of interregional redistribution (FA) would look had the
newcomers been automatically included into the system without adjustment
(Peffekoven
1990
: 348).
9
If the logic of the Reunification had been applied to
the FA system without any kind of adjustment, the total amount of transfers
would have risen from 3,468 DM billion, with positive effects for five western
l ander, to 20,998 DM billion with negative effects for all the western l ander
except Hamburg and Bremen, and a positive balance for East Germany of
20,716 DM billion. Bavaria, for instance, instead of paying 12 DM billion
a year would have paid 3,475 DM billion. These numbers convey the extent
to which the economic geography of the new Germany altered the relative
position of preexisting union members concerning interregional transfers.
Finally,
Figure 6.2
also indicates that Reunification brought along an
increase in the levels of market income inequality. Two distinctive groups
emerge: one anchored around the former average level of market income
inequality in the West (.41-.42), with a fairly spread out distribution in terms
δ
9
The data in
Table 6.3
are necessarily a simulation because, as we shall see, the incorporation of
the new l ander did not take place until 1995.
