The Unification Bonus (Malus) of East Germans After the Fall of the Berlin Wall

The Unification Bonus (Malus) of East Germans After the Fall of the Berlin Wall

This paper presents estimates of the unification bonus for East Germans over the period 1991 to 1998. The unification bonus is defined as the discounted value of the difference between a person`s actual income and his or her counterfactual real income stream forecast for a hypothetical continuation of economic life in a static GDR. Our central result is that nineteen percent of East Germans received a present value malus and so can be regarded as unification losers but that the aggregate bonus is ten times the size of the aggregate malus of the sample over this period.