Böhm, Sebastian 2015-09-23 The massive movement of capital and labor in opposite directions is the most striking characteristic of economic integration of Eastern and Western Germany. Beyond that, wage-setting behavior during the early years of unification and massive public social transfers have affected the transition path of the Eastern economy. In this paper, I set up a two-region open economy model with capital and labor mobility, wage-setting behavior, and public social transfers to explain major empirical trends of the German integration episode. I show that the model is able to replicate aggregate migration pattern in unified Germany and that wage-setting behavior has delayed labor productivity convergence between both German regions, whereas public social transfers have reduced the effect of wage setting on East-West net migration. application/pdf https://folia.unifr.ch/global/documents/304774 https://folia.unifr.ch/documents/304774/files/WP_SES_463.pdf eng info:eu-repo/semantics/openAccess License undefined Economic Integration German Reunification Capital Mobility Migration info:eu-repo/classification/udc/33 Regional economic integration and factor mobility in unified Germany http://purl.org/coar/resource_type/c_18ws