Arbeitspapier

The East-West German gap in revenue productivity: Just a tale of output prices?

East German manufacturers' revenue productivity (value-added per worker) is some 8 (25) percent below West German levels, even three decades after German unification. Using firm-product-level data containing information on product quantities and prices, we analyse the role of product specialisation and reject the prominent 'extended work bench hypothesis', stating a specialisation of Eastern firms in the intermediate input production as explanation for these sustained productivity differences. We decompose the East's revenue productivity disadvantage into Eastern firms selling at lower prices and producing more physical output for given amounts of inputs within ten-digit product industries. This suggests that Eastern firms specialise vertically in simpler product varieties generating less consumer value but being manufactured with less or cheaper inputs. Vertical specialisation, however, does not explain the productivity gap as Eastern firms are physically less productive for given product prices, implying a genuine physical productivity disadvantage of Eastern compared to Western firms.

Sprache
Englisch

Erschienen in
Series: IWH Discussion Papers ; No. 14/2020

Klassifikation
Wirtschaft
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Production, Pricing, and Market Structure; Size Distribution of Firms
Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Thema
German unification
regional productivity gap
physical productivity
product prices
product specialisation

Ereignis
Geistige Schöpfung
(wer)
Mertens, Matthias
Müller, Steffen
Ereignis
Veröffentlichung
(wer)
Halle Institute for Economic Research (IWH)
(wo)
Halle (Saale)
(wann)
2020

Handle
URN
urn:nbn:de:gbv:3:2-124550
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Mertens, Matthias
  • Müller, Steffen
  • Halle Institute for Economic Research (IWH)

Entstanden

  • 2020

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