TFP convergence in German states since reunification: Evidence and explanations

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2015-054

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts ; Investment; Capital; Intangible Capital; Capacity ; Technological Change: Choices and Consequences; Diffusion Processes ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Subject: productivity ; regional convergence ; German reunification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Burda, Michael C. ; Severgnini, Battista
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/146169
• Last update: 10.03.2025, 11:44 AM CET