Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/268670 
Year of Publication: 
2023
Series/Report no.: 
Ilmenau Economics Discussion Papers No. 172
Publisher: 
Technische Universität Ilmenau, Institut für Volkswirtschaftslehre, Ilmenau
Abstract: 
This paper argues that regional variation in the efficiency of labor allocation among German manufacturing plants plays a critical role in explaining regional disparities in productivity. In fact, we show that over 50% of the East-West productivity gap is associated with a less efficient labor allocation in former East Germany. Yet, we also demonstrate that the mere focus on East-West comparisons hides partially large differences between the German federal states. These results suggest that regional productivity differences could be substantially narrowed by a more efficient labor allocation among plants. With respect to the underlying causes, we find evidence that the regional differences in allocative efficiency are significantly correlated with differences in export intensity, market concentration and plant size.
Subjects: 
Regional productivity gap
productivity decomposition
allocative efficiency
labor allocation
JEL: 
E24
J24
L11
L25
O47
Document Type: 
Working Paper

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