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Human capital and innovation in East and West German manufacturing firms

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Author Info
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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Publisher 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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Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

References listed on IDEAS
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  1. Becker, G.S. & Murphy, K.M., 1991. "The Division of Labor, Coordination Costs, and Knowledge," University of Chicago - Economics Research Center 92-5, Chicago - Economics Research Center.
    Other versions:
  2. Katsoulacos, Y, 1991. "Technical Change and Employment under Imperfect Competition with Perfect and Imperfect Information," Journal of Evolutionary Economics, Springer, vol. 1(3), pages 207-18, July.
  3. Goldin, Claudia & Katz, Lawrence F, 1996. "Technology, Skill, and the Wage Structure: Insights from the Past," American Economic Review, American Economic Association, vol. 86(2), pages 252-57, May. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. Ulph, A. M. & Ulph, D. T., 1994. "Labour markets and innovation: Ex-post bargaining," European Economic Review, Elsevier, vol. 38(1), pages 195-210, January. [Downloadable!] (restricted)
  6. Stephen Machin & Annette Ryan & John Van Reenen, 1996. "Technology and changes in skill structure: Evidence from an international panel of industries," IFS Working Papers W96/06, Institute for Fiscal Studies.
    Other versions:
  7. Cohen, D. & Saint-Paul, G., 1994. "Uneven Technical Progress and Job Destructions," DELTA Working Papers 94-10, DELTA (Ecole normale supérieure).
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  8. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, vol. 64(6), pages 950-63, December. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. 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(1991-1), pages 1-106. [Downloadable!]
  11. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Blackwell Publishing, vol. 64(3), pages 445-64, July. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
  13. Stephen Machin & A Ryan & John Van Reenen, 1996. "Technology and Changes in Skill Structure: Evidence from an International Panel of Industries," CEP Discussion Papers dp0297, Centre for Economic Performance, LSE.
  14. Machin, Steve, 1994. "Changes in the Relative Demand for Skills in the UK Labour Market," CEPR Discussion Papers 952, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  15. Lechner, Michael, . "An Evaluation of Public Sector Sponsored Continuous Vocational Training Programs in East Germany," IVS discussion paper series 539, Institut für Volkswirtschaft und Statistik (IVS), University of Mannheim. [Downloadable!]
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  16. 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.
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Cited by:
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  1. 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], vol. 31(4), pages 637-647. [Downloadable!]
  2. Spyros Arvanitis & Juliette von Arx, 2004. "Bestimmungsfaktoren der Innovationstätigkeit und deren Einfluss auf Arbeitsproduktivität, Beschäftigung und Qualifikationsstruktur : Eine mikroökonometrische Untersuchung anhand von Paneldaten 198," KOF Working papers 04-91, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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