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Extent and Evolution of the Productivity Gap in Eastern Germany

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Author Info
Czarnitzki, Dirk
Abstract

Since the German re?unification in 1990, Eastern Germany is a transition economy. After a phase of catching up of productivity with respect to Western Germany from 1991 to 1996, the growth rates in the producing sector have dropped below the Western German ones since 1997. This study investigates whether this macroeconomic picture holds at the microeconomic level. For the special case of Eastern Germany, I suggest to identify productivity gaps by a comparison with Western Germany as a ?productivity benchmark?. Applying an econometric matching procedure allows to study the productivity gap at the firm level in detail. Besides labor and capital, other factors like innovation or firm ownership are taken into account. The macroeconomic facts are broadly confirmed: a significant gap still remains in recent years. Moreover innovators in Eastern Germany perform worse than their Western German pendants and firms owned by Western German or foreign companies perform better than Eastern German owned ones.

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Publisher Info
Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 03-25.

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Date of creation: 2003
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Handle: RePEc:zbw:zewdip:1019

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Related research
Keywords: Productivity Gap; Eastern Germany; Non-parametric Matching;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Fritsch, Michael & Mallok, Jörn, 1994. "Die Arbeitsproduktivität des industriellen Mittelstandes in Ostdeutschland : Stand und Entwicklungsperspektiven," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 27(1), pages 53-59. [Downloadable!]
  2. Hughes Hallett, A. & Ma, Y. & Melitz, J., 1996. "Unification and the policy predicament in Germany," Economic Modelling, Elsevier, vol. 13(4), pages 519-544, October. [Downloadable!] (restricted)
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  3. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
    Other versions:
  4. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-3), pages 783-832. [Downloadable!]
  5. Almus, Matthias & Czarnitzki, Dirk, 2003. "The Effects of Public R&D Subsidies on Firms' Innovation Activities: The Case of Eastern Germany," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 226-36, April.
  6. Bronwyn H. Hall and Adam Jaffe, and Manuel Trajtenberg., 2001. "Market Value and Patent Citations: A First Look," Economics Working Papers E01-304, University of California at Berkeley.
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  7. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Blackwell Publishing, vol. 65(2), pages 261-94, April. [Downloadable!] (restricted)
  8. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  9. Henning Klodt, 2000. "Industrial Policy and the East German Productivity Puzzle," German Economic Review, Blackwell Publishing, vol. 1(3), pages 315-333, 08. [Downloadable!] (restricted)
  10. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor and Francis Journals, vol. 19(3), pages 321-340. [Downloadable!] (restricted)
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  11. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2001-2), pages 1-92. [Downloadable!]
  12. Hall, B.H., 1999. "Innovation and Market Value," Economics Papers 1999-w3, Economics Group, Nuffield College, University of Oxford.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Johannes Stephan & Karin Szalai, 2003. "Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches," IWH Discussion Papers 183, Halle Institute for Economic Research. [Downloadable!]
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  2. Mallok, Jörn, 2005. "Produktivitätsentwicklung in ostdeutschen Industriebetrieben : Ergebnisse einer Fallstudienanalyse (1992-2002) (Development of productivity in eastern German industrial enterprises : results of a cas," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(4), pages 510-530. [Downloadable!]
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