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Distribution Dynamics of Regional GDP per Employee in Unifi ed Germany

Author

Listed:
  • Sebastian Vollmer

    (Harvard University & University of Hannover)

  • Hajo Holzmann

    (University of Marburg)

  • Florian Ketterer

    (University of Marburg)

  • Stephan Klasen

    (University of Göttingen)

Abstract

We investigate to what extent convergence in production levels per worker has been achieved in Germany since unification. To this end, we model the distribution of GDP per employee across German districts using two-component normal mixtures. While in the first year after unification, the two component distributions were clearly separated and bimodal, corresponding to the East and West German districts, respectively, in the following years they started to merge showing only one mode. Still, using the recently developed EM-Test for homogeneity in normal mixtures,the hypothesis of just a single normal component for the whole distribution is clearly rejected for all years. A Posterior analysis shows that about half of the East German districts were assigned to the richer component in 2006, thus catching up to levels of the West. The growth rate of a mover district is about one percentage point higher than the growth rate of a non-mover district which had the same initial level of GDP per employee.

Suggested Citation

  • Sebastian Vollmer & Hajo Holzmann & Florian Ketterer & Stephan Klasen, 2010. "Distribution Dynamics of Regional GDP per Employee in Unifi ed Germany," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 55, Courant Research Centre PEG, revised 26 Sep 2011.
  • Handle: RePEc:got:gotcrc:055
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    References listed on IDEAS

    as
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    Cited by:

    1. Andreas Schäfer & Thomas Steger, 2014. "Journey into the Unknown? Economic Consequences of Factor Market Integration under Increasing Returns to Scale," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 783-807, September.
    2. Sohn, Alexander & Klein, Nadja & Kneib, Thomas, 2014. "A new semiparametric approach to analysing conditional income distributions," Center for European, Governance and Economic Development Research Discussion Papers 192, University of Goettingen, Department of Economics.
    3. Korzhenevych, Artem & Langer, Sebastian, 2016. "The Flypaper Effect in Germany: An East-West Comparison," CEPIE Working Papers 10/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    4. repec:spr:soinre:v:136:y:2018:i:1:d:10.1007_s11205-016-1540-x is not listed on IDEAS
    5. Sohn, Alexander & Klein, Nadja & Kneib, Thomas, 2014. "A new semiparamtetric approach to analysing Conditional Income Distributions," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100630, Verein für Socialpolitik / German Economic Association.
    6. Volker Grossmann & Thomas Steger, 2013. "Konvergieren die Einkommen zwischen Ost- und Westdeutschland? Das deutsch-deutsche Experiment aus wachstumsökonomischer Sicht," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(02), pages 29-32, April.

    More about this item

    Keywords

    Regional convergence; distribution dynamics; mixture models; Germany; unification;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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