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The Role of Human Capital and Managerial Skills in Explaining Productivity Gaps Between East and West

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  • Wolfgang Steffen
  • Johannes Stephan

Abstract

This paper assesses the determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level using a unique database constructed by fieldwork. The determinants tested in a simple econometric regression model focus on the issue of human capital and modern market-oriented management. The results are novel inasmuch as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis establishes that the kind of human capital and expertise mostly needed in postsocialist firms are related to the particular requirements of a competitive market-based economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catchup, as well as the case that the gaps in labor productivity are most importantly rooted in a more labor-intensive production, which does not give rise to a competitive disadvantage.

Suggested Citation

  • Wolfgang Steffen & Johannes Stephan, 2008. "The Role of Human Capital and Managerial Skills in Explaining Productivity Gaps Between East and West," Eastern European Economics, Taylor & Francis Journals, vol. 46(6), pages 5-24, November.
  • Handle: RePEc:mes:eaeuec:v:46:y:2008:i:6:p:5-24
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    References listed on IDEAS

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    1. Kamil Galuscak & Daniel Munich, 2003. "Microfoundations of the Wage Inflation in the Czech Republic," Working Papers 2003/01, Czech National Bank, Research Department.
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    8. Kahn, Shulamit, 1997. "Evidence of Nominal Wage Stickiness from Microdata," American Economic Review, American Economic Association, pages 993-1008.
    9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, pages 433-444.
    10. Winter-Ebmer, Rudolf, 1996. "Wage curve, unemployment duration and compensating differentials," Labour Economics, Elsevier, vol. 3(4), pages 425-434, December.
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    Cited by:

    1. Nicholas Bloom & Helena Schweiger & John Van Reenen, 2011. "The Land that Lean Manufacturing Forgot? Management Practices in Transition Countries," NBER Working Papers 17231, National Bureau of Economic Research, Inc.
    2. Bartz, Wiebke & Mohnen, Pierre & Schweiger, Helena, 2016. "The role of innovation and management practices in determining firm productivity in developing economies," MERIT Working Papers 034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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