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Structural change and total factor productivity: Evidence from Germany


  • Henze, Philipp


This paper uses a long time series of German employment data to test the theory of Ngai & Pissarides (2007). The theory suggests that the shift of employment shares from manufacturing to services is due to divergent growth rates of total factor productivity (TFP) in the two sectors. To test the theoretical predictions, I use the "Establishment History Panel" together with sectoral data on total factor productivity. The results confirm the theoretical predictions, i.e. they show a negative relationship between employment growth and TFP growth.

Suggested Citation

  • Henze, Philipp, 2015. "Structural change and total factor productivity: Evidence from Germany," Economics Working Papers 2015-03, Christian-Albrechts-University of Kiel, Department of Economics.
  • Handle: RePEc:zbw:cauewp:201503

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    References listed on IDEAS

    1. Henze, Philipp, 2014. "Structural change and wage inequality: Evidence from German micro data," Center for European, Governance and Economic Development Research Discussion Papers 204, University of Goettingen, Department of Economics.
    2. Holger Görg & Aoife Hanley & Eric Strobl, 2008. "Productivity effects of international outsourcing: evidence from plant-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 670-688, May.
    3. Falvey, Rodney E & Gemmell, Norman, 1996. "Are Services Income-Elastic? Some New Evidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(3), pages 257-269, September.
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    5. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," Review of Economic Studies, Oxford University Press, vol. 68(4), pages 869-882.
    6. Boddin, Dominik & Henze, Philipp, 2015. "International trade and the occupational mix in manufacturing: Evidence from german micro data," Economics Working Papers 2015-05, Christian-Albrechts-University of Kiel, Department of Economics.
    7. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    8. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    9. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-817, September.
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    12. Eberle, Johanna & Jacobebbinghaus, Peter & Ludsteck, Johannes & Witter, Julia, 2011. "Generation of time-consistent industry codes in the face of classification changes : Simple heuristic based on the Establishment History Panel (BHP)," FDZ Methodenreport 201105_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
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    15. Yaman, F., 2011. "The costs of adjusting labor: Evidence from temporally disaggregated data," Working Papers 11/10, Department of Economics, City University London.
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    More about this item


    Structural Change; Economic Growth; Total Factor Productivity;

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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