Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223030
Authors: 
Mertens, Matthias
Müller, Steffen
Year of Publication: 
2020
Series/Report no.: 
IWH Discussion Papers 14/2020
Abstract: 
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.
Subjects: 
German unification
regional productivity gap
physical productivity
product prices
product specialisation
JEL: 
D24
L2
L11
O47
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.