TFP Convergence in German States Since Reunification: Evidence and Explanations

Michael C. Burda, Battista Severgnini

Publikation: Working paperForskning

Resumé

A quarter-century after reunification, labor productivity in eastern Germany continues to lag systematically behind the West. Denison-Hall-Jones point-in-time estimates point to large gaps in total factor productivity as the proximate cause, and auxiliary measurements which do not rely on capital stock data confirm a slowdown in TFP growth after 2000. Strikingly, capital intensity in eastern Germany, especially in industry, has overshot values in the West, casting doubt on the embodied technology hypothesis. Indeed, TFP growth is negatively associated with rates of expenditures on both total investment and plant and equipment. The best candidates for explaining the stubborn East-West TFP gap are the low concentration of managers in the East and the insufficient R&D expenditure, rather than the concentration of firm headquarters and R&D personnel.
OriginalsprogEngelsk
Udgivelses stedBerlin
UdgiverHumboldt State University
Antal sider41
StatusUdgivet - 2015
NavnSFB 649 Discussion Paper
Nummer2015-054
ISSN1860-5664

Emneord

  • Productivity
  • Regional convergence
  • German reunification

Citer dette

Burda, M. C., & Severgnini, B. (2015). TFP Convergence in German States Since Reunification: Evidence and Explanations. Berlin: Humboldt State University. SFB 649 Discussion Paper, Nr. 2015-054
Burda, Michael C. ; Severgnini, Battista. / TFP Convergence in German States Since Reunification : Evidence and Explanations. Berlin : Humboldt State University, 2015. (SFB 649 Discussion Paper; Nr. 2015-054).
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TFP Convergence in German States Since Reunification : Evidence and Explanations. / Burda, Michael C.; Severgnini, Battista.

Berlin : Humboldt State University, 2015.

Publikation: Working paperForskning

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N2 - A quarter-century after reunification, labor productivity in eastern Germany continues to lag systematically behind the West. Denison-Hall-Jones point-in-time estimates point to large gaps in total factor productivity as the proximate cause, and auxiliary measurements which do not rely on capital stock data confirm a slowdown in TFP growth after 2000. Strikingly, capital intensity in eastern Germany, especially in industry, has overshot values in the West, casting doubt on the embodied technology hypothesis. Indeed, TFP growth is negatively associated with rates of expenditures on both total investment and plant and equipment. The best candidates for explaining the stubborn East-West TFP gap are the low concentration of managers in the East and the insufficient R&D expenditure, rather than the concentration of firm headquarters and R&D personnel.

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KW - Regional convergence

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