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Human capital and innovation in East and West German manufacturing firms

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  • Pfeiffer, Friedhelm

Abstract

The paper analyses the theoretical and empirical relationship between employment, skill structure and innovation in East and West German manufacturing firms. The econometric part builds on firm data from the Mannheim Innovation Panel 1993, 1994 and 1995. In the German industrial sector, especially in East Germany, employment has declined and the share of highly skilled labour has risen. The econometric investigation of labour demand, based on the translog production function, reveals differences in the firms? behaviour in East and West German manufacturing and between innovative and non-innovative firms. It is shown that complex patterns of substitution between capital and different types of labour emerge, which depend on the stage of economic transformation, the type of firms, wage setting behaviour and public policy. The results suggest that in the current stage of transition subsidising labour might be more effective for creating jobs in East Germany than promoting R&D and capital equipment. Subsidies can be lower the higher the workers? qualification level is. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 97-08.

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Date of creation: 1997
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Handle: RePEc:zbw:zewdip:5117

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  1. Krueger, Alan B. & Pischke, Jörn-Steffen, 1992. "A comparative analysis of East and West German labor markets before and after unification," ZEW Discussion Papers 92-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Goldin, Claudia & Katz, Lawrence F, 1996. "Technology, Skill, and the Wage Structure: Insights from the Past," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 252-57, May.
  3. Felix Fitzroy & Michael Funke, 1994. "Skills, Wages and Employment in Eastern and Western Germany," CRIEFF Discussion Papers 9422, Centre for Research into Industry, Enterprise, Finance and the Firm.
  4. Machin, Steve & Van Reenen, John, 1996. "Technology and Changes in Skill Structure: Evidence from an International Panel of Industries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1434, C.E.P.R. Discussion Papers.
  5. Katsoulacos, Y, 1991. "Technical Change and Employment under Imperfect Competition with Perfect and Imperfect Information," Journal of Evolutionary Economics, Springer, Springer, vol. 1(3), pages 207-18, July.
  6. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
  7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  8. Becker, G.S. & Murphy, K.M., 1991. "The Division of Labor, Coordination Costs, and Knowledge," University of Chicago - Economics Research Center, Chicago - Economics Research Center 92-5, Chicago - Economics Research Center.
  9. Geib, Thorsten & Lechner, Michael & Pfeiffer, Friedhelm & Salomon, Susanne, 1992. "Die Struktur der Einkommensunterschiede in Ost- und Westdeutschland ein Jahr nach der Vereinigung," ZEW Discussion Papers 92-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Ulph, A. M. & Ulph, D. T., 1994. "Labour markets and innovation: Ex-post bargaining," European Economic Review, Elsevier, Elsevier, vol. 38(1), pages 195-210, January.
  11. Licht, Georg & Harhoff, Dietmar, 1993. "Das Mannheimer Innovationspanel," ZEW Discussion Papers 93-21, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Jacob Mincer, 1989. "Human Capital Responses to Technological Change in the Labor Market," NBER Working Papers 3207, National Bureau of Economic Research, Inc.
  13. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, Springer, vol. 3(2), pages 153-59, May.
  14. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
  15. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(3), pages 445-64, July.
  16. Hans-Werner Sinn, 1995. "Staggering along: wages policy and investment support in East Germany," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 3(4), pages 403-426, December.
  17. Stephen Machin, 1995. "Changes in the Relative Demand for Skills in the UK Labour Market," CEP Discussion Papers dp0221, Centre for Economic Performance, LSE.
  18. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, American Economic Association, vol. 64(6), pages 950-63, December.
  19. Dobbs, I M & Hill, M B & Waterson, M, 1987. "Industrial Structure and the Employment Consequences of Technical Change," Oxford Economic Papers, Oxford University Press, vol. 39(3), pages 552-67, September.
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Cited by:
  1. Spyros Arvanitis & Juliette von Arx, 2004. "Bestimmungsfaktoren der Innovationstätigkeit und deren Einfluss auf Arbeitsproduktivität, Beschäftigung und Qualifikationsstruktur : Eine mikroökonometrische Untersuchung anhand von Paneldaten 1988-20," KOF Working papers 04-91, KOF Swiss Economic Institute, ETH Zurich.
  2. repec:iab:iabmit:v:31:i:4:p:637-647 is not listed on IDEAS
  3. Kölling, Arnd, 1998. "Dynamische Arbeitsnachfrage und asymmetrisches Anpassungsverhalten in der Bundesrepublik Deutschland : eine Untersuchung mit Daten aus dem IAB-Betriebspanel (Dynamic labour demand and asymmetrical adj," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 31(4), pages 637-647.
  4. Bellmann, Lutz & Kohaut, Susanne, 1999. "Betriebliche Beschäftigungsentwicklung und Innovationsaktivitäten : Ergebnisse aus dem IAB-Betriebspanel 1998," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 32(4), pages 416-422.

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