European Economy. Economic Papers. Germany's growth performance in the 1990's

Total gross transfers 
6)
135
146
162
164
178
180
176
183
191
Return flows
Additional tax revenue
7)
31
35
37
41
43
45
45
45
48
Additional administrative revenue
2
2
2
2
2
2
2
2
2
Total
33
37
39
43
45
47
47
47
50
Total intra-German net transfers
102
109
123
120
133
133
129
136
141
in % of West German GDP 
9)
3.7
3.8
4.2
4.0
4.2
4.2
4.0
4.0
4.1
European Union budget 
8)
4
5
5
6
7
7
7
7
7
Total net transfers
106
114
128
126
140
140
136
143
148
in % of East German GDP 
9)
52.3
43.8
40.2
34.2
35.6
34.2
32.6
33.6
34.1
1) As of 1995 also tax renouncements of the federal government on the basis of the reorganisation of the fiscal equalisation scheme
2) Debt redemption, excluding the subsidies of federal government and the Länder
3) Net balance East excluding federal government transfers
4) Net balance East including federal government transfers to the Federal Labour Office
5) As of 1995 essentially revenues within the framework of the new fiscal equalisation scheme
6) Excluding double counting of federal government transfers to the Federal Labour Office (see footnote 4)
7) Estimate; as of 1996 including the impact of the annual tax law
8) Estimate
9) Berlin included in West German GDP
Source: 
Bundesministerium der Finanzen; 
no data after 1999
The immediate adoption of the West German welfare system – irrespective of the huge
differences in economic situation - has not only proved to be expensive in fiscal terms, but also
in terms of persistently high unemployment. In general, the decision to take up a job depends
mainly on the expected difference in real disposable income minus the transaction
19
This box mainly draws from section II of Davies/Hallet 2001.
20
Cf. Sinn/ Westermann 2001.
21
Deutsche Bundesbank 1998

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