Still a divide? A decade of East-West Differences in Earnings Justice in Germany

About this Session

Time

Thu. 11.04.'24 14:45

Room

Speaker

More than 30 years after reunification, sizeable structural differences remain between East and West Germany. As of 2019, the average hourly wage in East Germany was about 20 percent lower compared to West Germany with unemployment also being higher in East Germany. Such structural cleavages between the East and West of Germany—in combination with assumptions of deeply rooted ideological differences—often serve as arguments in the diagnosis of a polarized society that is struggling for legitimacy. And indeed, past research has documented an East-West fault line in the legitimation of economic inequality: Workers in East Germany perceived their earnings to be more unfair and respondents in East Germany expressed more support for equality of outcomes while respondents in West Germany expressed higher agreement with relying on individual contributions as grounds for allocating rewards in a society. With this contribution, we aim to move from a cross-sectional diagnosis of an East-West divide to tracing the development of these differences over time. Taking a longitudinal perspective, we rely on workers’ sense of justice regarding their own earnings that was assessed biennially in the Socio-Economic Panel Study since 2009. This unique panel data on earnings justice spans six measurement points across a 10-year timespan (2009-2019) allowing to capture both overall trends in injustice perceptions as well as individual-level changes. Preliminary findings reveal that, over the past decade, average injustice perceptions were always more pronounced in East Germany than in West Germany but that the East-West gap has been shrinking since 2013. The closing of the gap seems to be driven by two simultaneous developments: views about one’s own earnings become more positive among workers in East Germany, especially among employees in the lower deciles of the income distribution. On the other hand, evaluations become less positive in West Germany for all income deciles. We link this overall trend to macro-level changes in the earnings distribution and investigate how workers in Germany react to changes in their relative position in the earnings distribution using fixed-effects regressions. Overall, our findings point in the direction of an East-West convergence in justice perceptions rather than an increased polarization. As workers in East-Germany experience wage gains, they also adapt their justice evaluations. This suggests that East-West differences in earnings justice perceptions are less the result of ingrained ideological differences but instead reflect structural conditions. If structural differences erode, likely so will differences in the sense of justice.