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European Sociological Review 10:199-217 1994
© 1994 Oxford University Press

research-article

Incomes in Planned and a Market Economy: The Case of the German Democratic Republic and the ‘Former’ Federal Republic of Germany

MARC SZYDLIK

Harvad University, Department of Sociology William James Hall, Cambridge, MA 02138, USA.
From 1 September, 1995: Free Universität Berlin, Institute fü Soziologie, Babelsberger Str. 14-16, 10715 Berlin, Germany

This paper examines the extents and determinants of earned income inequalities in the German Democratic Republic and the ‘former’ Federal Republic of Germany. In both systems income differences can be distinguished on the basis of individual and structural inequalities as well as according to organizational and economic structures. Nevertheless, different theoretical explanations must be used, in particular regarding structural inequalities. In the FRG, economic structures are mainly based on the market position of the firms. In the GDR, however, they refer to the firms' importance for the national economy and their bargaining positions in relation to superior institutions. The organizational structures in the Federal Republic of Germany can be characterized, for example, by the workers' affiliation to the Firms' core or periphery, by firm-internal career-ladders, and by the specific qualification-based bonds between employers and employees. Examples for the GDR are informal rules and bargaining positions in relation to superiors.

The empirical analyses (OLS estimates and residual variance analyses with the data from the German Socio-economic Panel East and West) show that in both systems individual productivity-relevant characteristics are responsible for the main part of the income differences. Nevertheless, women's incomes are—independent of the system—much lower than those of men (both the overall and the gender-specific differences are smaller in the GDR than in the FRG). Furthermore, structural variables like industry, firm size, and job requirements are important determinants of income differences in the GDR as well as in the FRG. This is the case for both women and men. In contrast to the GDR, however, organizational structures are more and economic structures are less important in the FRG.

Manuscript received: April 1, 1993.


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