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Media Response September 2024 Steffen Müller: Zahl der Firmenpleiten im August leicht gesunken in: Wirtschaft + Markt, 14.09.2024 IWH: Forscher erwarten Null-Wachstum in:…
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The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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Research Profile of the Department of Laws, Regulations and Factor Markets The Department of Laws, Regulations and Factor Markets conducts research on the interaction of labour…
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IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct Investment) comprises a total population of affiliates of multinational enterprises (MNEs) in selected…
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The maths behind gut decisions First carefully weigh up the costs and benefits and then make a rational decision. This may be the way we want it to be. But in reality, invisible…
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Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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The East-West German Gap in Revenue Productivity: Just a Tale of Output Prices?
Matthias Mertens, Steffen Müller
Journal of Comparative Economics,
No. 3,
2022
Abstract
East German manufacturers’ revenue productivity is substantially below West German levels, even three decades after German unification. Using firm-product-level data with product quantities and prices, we analyze the role of product specialization and show that the prominent “extended work bench hypothesis” cannot explain these sustained productivity differences. Eastern firms specialize in simpler product varieties generating less consumer value and being manufactured with less or cheaper inputs. Yet, such specialization cannot explain the productivity gap because Eastern firms are physically less productive for given product prices. Hence, there is a genuine price-adjusted physical productivity disadvantage of Eastern compared to Western firms.
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