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Catching-up of East German Labour Productivity in the 1990s

Author

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  • Barrell Ray
  • Willem te Velde Dirk

    (National Institute of Economic and Social Research, London, United Kingdom of Great Britain and Northern Ireland)

Abstract

We provide empirical evidence for exogenous and endogenous catching-up of East German labour productivity to West German levels. We argue that labour productivity in East Germany has caught up faster than has happened elsewhere. The sudden formation of the German Monetary Union was followed by large transfers to East Germany, migration of workers to West Germany, reorganization and privatization of East German firms. This has quickly led to a partial closing of the organizational, idea and object gaps that existed between East and West Germany. This paper analyses labour productivity in East and West Germany using both aggregate German data and unbalanced panel analysis of developments in East and West Germany. Factors affecting the organization of production, and especially privatization and `foreign' firms, are found to be particularly important in this context.

Suggested Citation

  • Barrell Ray & Willem te Velde Dirk, 2000. "Catching-up of East German Labour Productivity in the 1990s," German Economic Review, De Gruyter, vol. 1(3), pages 271-297, August.
    • Handle: RePEc:bpj:germec:v:1:y:2000:i:3:p:271-297
    DOI: 10.1111/1468-0475.00014
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    2. Klaus Abberger & Biswa Nath Bhattacharyay & Chang Woon Nam & Gernot Nerb & Siegfried Schönherr, 2014. "How Can the Crisis Vulnerability of Emerging Economies Be Reduced?," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 65, October.
    3. Hyll, Walter & Schneider, Lutz, 2018. "Income comparisons and attitudes towards foreigners - Evidence from a natural experiment," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 634-655.
    4. Falko Juessen, 2009. "A distribution dynamics approach to regional GDP convergence in unified Germany," Empirical Economics, Springer, vol. 37(3), pages 627-652, December.
    5. Yvonne Schindele, 2010. "How Long Does it Take to Become an Entrepreneurial Society - The Case of German Convergence in Self-Employment," Jena Economics Research Papers 2010-015, Friedrich-Schiller-University Jena.
    6. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Bernd Aumann & Rolf Scheufele, 2010. "Is East Germany catching up? A time series perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 22(2), pages 177-192.
    8. Hans-Friedrich Eckey & Reinhold Kosfeld & Matthias Türck, 2007. "Regional Convergence in Germany: a Geographically Weighted Regression Approach," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(1), pages 45-64.
    9. Yongzheng Liu, 2014. "Does competition for capital discipline governments? The role of fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(3), pages 345-374, June.
    10. Hyll, Walter & Schneider, Lutz, 2016. "Social Comparisons and Attitudes towards Foreigners. Evidence from the ‘Fall of the Iron Curtain’," IWH Discussion Papers 12/2016, Halle Institute for Economic Research (IWH).
    11. Peter Havlik, 2003. "Restructuring of manufacturing industry in the central and east european countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(1), pages 19-36.
    12. Nils Braakmann & Alexander Vogel, 2010. "The impact of the 2004 EU enlargement on the performance of service enterprises in Germany’s eastern border region," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(1), pages 75-89, April.
    13. Jonathan Eberle, 2019. "Regional fiscal equalization. A simultaneous equation approach to assess the economic effects of fiscal policy," Working Papers on Innovation and Space 2019-01, Philipps University Marburg, Department of Geography.
    14. Jan Kluge & Michael Weber, 2018. "Decomposing the German East–West wage gap," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(1), pages 91-125, January.

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