Kiel Working Papers, Kiel Institute for World Economics
No 1310:
Explaining the East German Productivity Gap ; The Role of Human Capital
Joachim Ragnitz
Abstract: The paper concentrates on the question whether the low
level of productivity in East Germany can be explained by deficits in the
stock of human capital. It is shown that figures on “formal” qualifications
yield a too optimistic view on human capital endowments; in fact, the
effective stock on human capital in East Germany is lower than in West
Germany when differences in job activities are taken into account. One
reason is the dominance of non human capitalintensive industries as a
consequence of locational decisions in the past. Another reason is a low
human capital intensity within the different branches which is a
consequence of specialization within affiliated firms. In the next years
human capital endowment of the East German economy will further deteriorate
as a result of selective migration and unfavorable educational attendance
of the younger cohorts. This impedes a fast convergence in productivity
between East and West Germany.
Keywords: Productivity, East Germany, Human Capital; (follow links to similar papers)
JEL-Codes: J24,; O47; (follow links to similar papers)
30 pages, January 2007
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