Human capital and innovation in East and West German manufacturing firms

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 97-08

Classification and Topics

• Classification: Wirtschaft ; Technological Change: Choices and Consequences; Diffusion Processes ; Wage Level and Structure; Wage Differentials ; Industry Studies: Manufacturing: General
• Subject: Industrielle Beschäftigung ; Arbeitsnachfrage ; Humankapital ; Innovation ; Faktorsubstitution ; Weiterbildung ; Lohnsubvention ; Deutschland ; Neue Bundesländer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pfeiffer, Friedhelm
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 1997

Further information

• Handle: http://hdl.handle.net/10419/24237
• Last update: 10.03.2025, 11:43 AM CET