IDEAS home Printed from https://ideas.repec.org/a/bla/germec/v1y2000i3p271-297.html

Catching‐up of East German Labour Productivity in the 1990s

Author

Listed:
  • Ray Barrell
  • Dirk Willem Te Velde

Abstract

We provide empirical evidence for exogenous and endogenous catching‐up of East German labour productivity to West German levels. We argue that labour productivity in East Germany has caught up faster than has happened elsewhere. The sudden formation of the German Monetary Union was followed by large transfers to East Germany, migration of workers to West Germany, reorganization and privatization of East German firms. This has quickly led to a partial closing of the organizational, idea and object gaps that existed between East and West Germany. This paper analyses labour productivity in East and West Germany using both aggregate German data and unbalanced panel analysis of developments in East and West Germany. Factors affecting the organization of production, and especially privatization and ‘foreign’ firms, are found to be particularly important in this context.

Suggested Citation

  • Ray Barrell & Dirk Willem Te Velde, 2000. "Catching‐up of East German Labour Productivity in the 1990s," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 271-297, August.
    • Handle: RePEc:bla:germec:v:1:y:2000:i:3:p:271-297
    DOI: 10.1111/1468-0475.00014
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1468-0475.00014
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1468-0475.00014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barrell, Ray & Pain, Nigel, 1997. "The Growth of Foreign Direct Investment in Europe," National Institute Economic Review, National Institute of Economic and Social Research, vol. 160, pages 63-75, April.
    2. Sinn Hans-Werner, 2000. "EU Enlargement, Migration, and Lessons from German Unification," German Economic Review, De Gruyter, vol. 1(3), pages 299-314, August.
    3. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    4. 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.
    5. Dani Rodrik & Tain-Jy Chen, 1998. "TFPG Controversies, Institutions and Economic Performance in East Asia," International Economic Association Series, in: Yujiro Hayami & Masahiko Aoki (ed.), The Institutional Foundations of East Asian Economic Development, chapter 4, pages 79-105, Palgrave Macmillan.
    6. 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.
    7. Florence Hubert & Nigel Pain, 2000. "Inward Investment and Technical Progress in the UK Manufacturing Sector," OECD Economics Department Working Papers 268, OECD Publishing.
    8. Albert Müller, 1998. "Weiter nachlassende Investitionstätigkeit in Ostdeutschland," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 51(31), pages 16-19, October.
    9. Lee, Kevin & Pesaran, M Hashem & Smith, Ron, 1997. "Growth and Convergence in Multi-country Empirical Stochastic Solow Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 357-392, July-Aug..
    10. Barrell, Ray & Pain, Nigel, 1997. "Foreign Direct Investment, Technological Change, and Economic Growth within Europe," Economic Journal, Royal Economic Society, vol. 107(445), pages 1770-1786, November.
    11. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    12. Keller, Wolfgang, 2000. "From socialist showcase to Mezzogiorno? Lessons on the role of technical change from East Germany's post-World War II growth performance," Journal of Development Economics, Elsevier, vol. 63(2), pages 485-514, December.
    13. Andrea Boltho & Wendy Carlin & Pasquale Scaramozzino, 1999. "Will East Germany become a new Mezzogiorno?," Chapters, in: John Adams & Francesco Pigliaru (ed.), Economic Growth and Change, chapter 13, Edward Elgar Publishing.
    14. Carlin Wendy & Mayer Colin, 1995. "Structure and Ownership of East German Enterprises," Journal of the Japanese and International Economies, Elsevier, vol. 9(4), pages 426-453, December.
    15. Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
    16. Rowthorn, Robert, 1995. "Capital Formation and Unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 11(1), pages 26-39, Spring.
    17. Hughes Hallett, A J & Ma, Yue, 1993. "East Germany, West Germany, and Their Mezzogiorno Problem: A Parable for European Economic Integration," Economic Journal, Royal Economic Society, vol. 103(417), pages 416-428, March.
    18. Burda, Michael C & Funke, Michael, 1993. "Eastern Germany: Can't We Be More Optimistic?," CEPR Discussion Papers 863, C.E.P.R. Discussion Papers.
    19. Funke, Michael & Strulik, Holger, 1999. "Regional growth in West Germany: convergence or divergence?," Economic Modelling, Elsevier, vol. 16(4), pages 489-502, December.
    20. Philippe Aghion & Olivier Jean Blanchard & Wendy Carlin, 1997. "The Economics of Enterprise Restructuring in Central and Eastern Europe," International Economic Association Series, in: John E. Roemer (ed.), Property Relations, Incentives and Welfare, chapter 11, pages 271-325, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Smolny, Werner, 2010. "Dynamic adjustment and long-run equilibria: Panel data estimates for the East German states," Economic Modelling, Elsevier, vol. 27(5), pages 1223-1229, September.
    2. Klaus Abberger & Biswa Nath Bhattacharyay & Chang Woon Nam & Gernot Nerb & Siegfried Schönherr, 2014. "How Can the Crisis Vulnerability of Emerging Economies Be Reduced?," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 65.
    3. Hyll, Walter & Schneider, Lutz, 2018. "Income comparisons and attitudes towards foreigners - Evidence from a natural experiment," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 634-655.
    4. Yvonne Schindele, 2010. "How Long Does it Take to Become an Entrepreneurial Society - The Case of German Convergence in Self-Employment," Jena Economics Research Papers 2010-015, Friedrich-Schiller-University Jena.
    5. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Falko Juessen, 2009. "A distribution dynamics approach to regional GDP convergence in unified Germany," Empirical Economics, Springer, vol. 37(3), pages 627-652, December.
    7. Bernd Aumann & Rolf Scheufele, 2010. "Is East Germany catching up? A time series perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 22(2), pages 177-192.
    8. Hans-Friedrich Eckey & Reinhold Kosfeld & Matthias Türck, 2007. "Regional Convergence in Germany: a Geographically Weighted Regression Approach," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(1), pages 45-64.
    9. Yongzheng Liu, 2014. "Does competition for capital discipline governments? The role of fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(3), pages 345-374, June.
    10. Hyll, Walter & Schneider, Lutz, 2016. "Social Comparisons and Attitudes towards Foreigners. Evidence from the ‘Fall of the Iron Curtain’," IWH Discussion Papers 12/2016, Halle Institute for Economic Research (IWH).
    11. Peter Havlik, 2003. "Restructuring of manufacturing industry in the central and east european countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(1), pages 19-36.
    12. Nils Braakmann & Alexander Vogel, 2010. "The impact of the 2004 EU enlargement on the performance of service enterprises in Germany’s eastern border region," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(1), pages 75-89, April.
    13. Jonathan Eberle, 2019. "Regional fiscal equalization. A simultaneous equation approach to assess the economic effects of fiscal policy," Working Papers on Innovation and Space 2019-01, Philipps University Marburg, Department of Geography.
    14. Jan Kluge & Michael Weber, 2018. "Decomposing the German East–West wage gap," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(1), pages 91-125, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keller, Wolfgang, 2000. "From socialist showcase to Mezzogiorno? Lessons on the role of technical change from East Germany's post-World War II growth performance," Journal of Development Economics, Elsevier, vol. 63(2), pages 485-514, December.
    2. Frank Siebern, 2000. "Better LATE? Instrumental Variables Estimation of the Returns to Job Mobility during Transition," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 335-362, August.
    3. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(3), pages 237-270, September.
    4. John Driffill & Marcus Miller, 2003. "No Credit for Transition: European Institutions and German Unemployment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(1), pages 41-60, February.
    5. Falko Juessen, 2009. "A distribution dynamics approach to regional GDP convergence in unified Germany," Empirical Economics, Springer, vol. 37(3), pages 627-652, December.
    6. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Modeling Korean Unification," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 400-421, June.
    7. Page, William, 2003. "Germany's Mezzogiorno revisited: Institutions, fiscal transfers and regional convergence," Research Notes 9, Deutsche Bank Research.
    8. 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(2), pages 1-92.
    9. Smolny Werner, 2009. "Wage Adjustment, Competitiveness and Unemployment – East Germany after Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 130-145, April.
    10. Michael Funke & Jörg Rahn, 2002. "How efficient is the East German economy? An exploration with microdata," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 201-223.
    11. Burda, Michael C. & Weder, Mark, 2017. "The Economics of German Unification after Twenty-five Years: Lessons for Korea," SFB 649 Discussion Papers 2017-009, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    12. 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.
    13. Hans‐Werner Sinn, 2002. "Germany’s Economic Unification: An Assessment after Ten Years," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 113-128, February.
    14. Burda, Michael C. & Severgnini, Battista, 2018. "Total factor productivity convergence in German states since reunification: Evidence and explanations," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 192-211.
    15. repec:hum:wpaper:sfb649dp2017-009 is not listed on IDEAS
    16. Falko Juessen, 2005. "A distribution dynamics approach to regional income convergence in reunified Germany," ERSA conference papers ersa05p411, European Regional Science Association.
    17. Andrea Boltho & Wendy Carlin & Pasquale Scaramozzino, 1999. "Will East Germany become a new Mezzogiorno?," Chapters, in: John Adams & Francesco Pigliaru (ed.), Economic Growth and Change, chapter 13, Edward Elgar Publishing.
    18. Baker, Jessica & Carreras, Oriol & Kirby, Simon & Meaning, Jack & Piggott, Rebecca, 2016. "Modelling events: The short-term economic impact of leaving the EU," Economic Modelling, Elsevier, vol. 58(C), pages 339-350.
    19. Fabio Canova & Morten Ravn, 2000. "The Macroeconomic Effects of German Unification: Real Adjustments and the Welfare State," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 423-460, July.
    20. Kutan, Ali M. & Yigit, Taner M., 2007. "European integration, productivity growth and real convergence," European Economic Review, Elsevier, vol. 51(6), pages 1370-1395, August.
    21. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 681-703, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:germec:v:1:y:2000:i:3:p:271-297. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.