The East-West Gap in Pay Fairness Perceptions Converged Between 2009 and 2023.

Abstract

This study investigates regional differences in pay fairness perceptions among employees in eastern and western Germany from 2009 to 2023. Using longitudinal data from the Socio-Economic Panel study, the analysis reveals substantial initial disparities: Employees in eastern Germany perceive their gross earnings as more unfair than employees in western Germany do. Over time, however, these regional differences diminish. Analyses stratified by wage deciles show that this convergence in pay fairness is primarily driven by a decrease in unfairness perceptions among low-wage employees in eastern Germany. This development, in turn, is driven by a narrowing East-West gap in actual earnings among low-wage employees. The finding of converging pay fairness perceptions in eastern and western Germany remains robust after adjusting for individual differences (gender, age, education, labor market experience, immigration background) and structural factors (economic area, public sector, organizational size), underscoring that there has been a true convergence of perceptions over time. While this development is cause for optimism, the overall convergence is driven not solely by employees in eastern Germany improving in terms of pay fairness but also by employees in western Germany showing an overall increase in perceived unfairness.