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Distribution dynamics of regional GDP per employee in unified Germany

Author

Listed:
  • Sebastian Vollmer
  • Hajo Holzmann
  • Florian Ketterer
  • Stephan Klasen

Abstract

We investigate to what extent convergence in production levels per worker has been achieved in Germany since unification. To this end, we model the distribution of GDP per employee across German districts using two-component normal mixtures. While in the first year after unification, the two-component distributions were clearly separated and bimodal, corresponding to the East and West German districts, respectively, in the following years they started to merge showing only one mode. Still, using the recently developed EM-test for homogeneity in normal mixtures, the hypothesis of just a single normal component for the whole distribution is clearly rejected for all years. A Posterior analysis shows that about a third of the East German districts were assigned to the richer component in 2006, thus catching up to levels of the West. The growth rate of a mover district is about 1% point higher than the growth rate of a non-mover district which had the same initial level of GDP per employee. Copyright The Author(s) 2013

Suggested Citation

  • Sebastian Vollmer & Hajo Holzmann & Florian Ketterer & Stephan Klasen, 2013. "Distribution dynamics of regional GDP per employee in unified Germany," Empirical Economics, Springer, vol. 44(2), pages 491-509, April.
    • Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:491-509
    DOI: 10.1007/s00181-011-0543-3
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    Cited by:

    1. Andreas Schäfer & Thomas Steger, 2014. "Journey into the Unknown? Economic Consequences of Factor Market Integration under Increasing Returns to Scale," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 783-807, September.
    2. Sohn, Alexander & Klein, Nadja & Kneib, Thomas, 2014. "A new semiparametric approach to analysing conditional income distributions," University of Göttingen Working Papers in Economics 192, University of Goettingen, Department of Economics.
    3. Korzhenevych, Artem & Langer, Sebastian, 2016. "The Flypaper Effect in Germany: An East-West Comparison," CEPIE Working Papers 10/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    4. Janina Isabel Steinert & Lucie Dale Cluver & G. J. Melendez-Torres & Sebastian Vollmer, 2018. "One Size Fits All? The Validity of a Composite Poverty Index Across Urban and Rural Households in South Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 136(1), pages 51-72, February.
    5. Frank Bickenbach & Eckhardt Bode, 2013. "New Economic Geography and Reunified Germany at Twenty: A Fruitful Match?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(2), pages 120-153, June.
    6. Sohn, Alexander & Klein, Nadja & Kneib, Thomas, 2014. "A new semiparamtetric approach to analysing Conditional Income Distributions," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100630, Verein für Socialpolitik / German Economic Association.
    7. Volker Grossmann & Thomas Steger, 2013. "Konvergieren die Einkommen zwischen Ost- und Westdeutschland? Das deutsch-deutsche Experiment aus wachstumsökonomischer Sicht," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(02), pages 29-32, April.

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    More about this item

    Keywords

    Regional convergence; Distribution dynamics; Mixture models; Germany; Unification; O47; R11;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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