The Big Sell: Privatizing East Germany’s Economy

Lukas Mergele, Moritz Hennicke and Moritz Lubczyk

No 2020-41, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: The end of communism in the 1990s probably is the most fundamental restructuring of institutions witnessed in recent history. At its core was the large-scale redistribution of previously state-owned companies. We construct a unique firm-level dataset to study this redistribution in East Germany where the entire state-owned economy was either privatized or liquidated within less than five years. We examine whether the privatization authority followed its mandate to privatize competitive firms using initial labor productivity to indicate firms’ competitiveness. Our results highlight that firms with higher baseline productivity are more likely to be privatized, yield higher sales prices, are more often acquired by West German investors, and are more likely to remain in business even 20 years after leaving public ownership. The privatization agency plausibly contributed to these outcomes by rating and prioritizing productive firms

Keywords: Privatization; labor productivity; German reunification (search for similar items in EconPapers)
JEL-codes: D24 G38 H11 L33 P31 (search for similar items in EconPapers)
Pages: 38 p.
Date: 2020-09
New Economics Papers: this item is included in nep-bec, nep-lma and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: The Big Sell: Privatizing East Germany's Economy (2020)
Working Paper: The big sell: Privatizing East Germany's economy (2020)
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