Explaining the low labor productivity in East Germany – A spatial analysis

Nicola Fuchs-Schündeln and Rima Izem
Authors registered in the RePEc Author Service: Nicola Fuchs-Schuendeln

Journal of Comparative Economics, 2012, vol. 40, issue 1, 1-21

Abstract: This paper sheds light on the transferability of human capital in periods of dramatic structural change by analyzing the unique event of German reunification. We explore whether the comparatively low labor productivity in East Germany after reunification is caused by the depreciation of human capital at reunification, or by unfavorable job characteristics. East German workers should have been hit harder by reunification the more specific human capital was. Treating both human capital and job characteristics as unobservables, we derive their relative importance in explaining the low labor productivity by estimating a spatial structural model that predicts commuting behavior across the former East–West border and the resulting regional unemployment rates. The identification of the model is based on the slope of the unemployment rate across the former border. The results indicate that East and West German skills are very similar, while job characteristics differ significantly between East and West in the sample period 1998–2004. Hence, they suggest that a significant part of the human capital accumulated in the East before 1990 was transferable.

Keywords: Transferability of human capital; Spatial allocation of labor (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0147596711000539
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Explaining the Low Labor Productivity in East Germany - A Spatial Analysis (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:40:y:2012:i:1:p:1-21

DOI: 10.1016/j.jce.2011.09.001

Access Statistics for this article

Journal of Comparative Economics is currently edited by D. Berkowitz and G. Roland

More articles in Journal of Comparative Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().