Kiel Working Papers, Kiel Institute for World Economics
No 1307:
Explaining the Low Labor Productivity in East Germany. A Spatial Analysis
Nicola Fuchs-Schündeln and Rima Izem
Abstract: This paper presents a spatial analysis of unemployment
rates in Germany. The goal of this analysis is to explain the stubbornly
low labor productivity and high unemployment rates in Eastern Germany. We
build a model of commuting to distinguish between worker and job
characteristics as the main causes of the low labor productivity, and use
the method of simulated moments to estimate the East-West ratios of worker
and job characteristics. The “slope” of the unemployment rate across the
former East-West border serves as the main identification of the model. The
preliminary results suggest that East and West German skills are very
similar, while job characteristics differ significantly between East and
West.
Keywords: Transferability of Human Capital, Spatial Allocation of Labor; (follow links to similar papers)
JEL-Codes: C15,; J24,; J61; (follow links to similar papers)
25 pages, January 2007
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