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The German miracle or the miracle of the cultural attitude: Inequality and convergence as products of culture in Germany

Annie Tubadji (Department of Economics, Regensburg University, Regensburg, Germany)
Nataly Gnezdilova (Department of Economics, Regensburg University, Regensburg, Germany)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 4 November 2014

Abstract

Purpose

The purpose of this paper is to explore the link between redistribution, convergence and local cultural capital (as defined by culture-based development concept).

Design/methodology/approach

The paper infers the basic mechanism of the cultural dependence of convergence and inequality – through an empirical test for the case of the “German job miracle” during the current crisis. Two empirical questions are asked: first, is local income inequality associated with local cultural capital and second, is the negative convergence between East and West Germany during the crisis related to culturally sensitive employers’ preference for job preservation vs job loss. An OLS enquiry and two deeper estimation methods (a logit model and a 3SLS simultaneous equations model) are alternatively applied in order to triangulate the empirical results.

Findings

The findings support the existence of cultural effect on local income inequality and cultural path dependence of employers’ preferences for job preservation vs job loss in a condition of economic shock.

Originality/value

The paper provides both theoretical reasoning and empirical illustration of the significance of the cultural effect on human preferences which may or may not allow for redistribution and convergence between localities.

Keywords

Acknowledgements

JEL Classifications —Z10, O15, J20

The authors would like to thank Professor Udo Brixy and Klara Kaufman, Institute for Employment Research (IAB), Germany, for their invaluable help in gathering the full data set, as well as to Professor Joachim Moeller (Regensburg University and IAB, Germany) for useful comments and provided additional data on inequality.

Citation

Tubadji, A. and Gnezdilova, N. (2014), "The German miracle or the miracle of the cultural attitude: Inequality and convergence as products of culture in Germany", International Journal of Social Economics, Vol. 41 No. 11, pp. 1014-1037. https://doi.org/10.1108/IJSE-11-2012-0211

Publisher

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Emerald Group Publishing Limited

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