Abstract
We investigate to what extent convergence in production levels per worker has been achieved in Germany since unification. To this end, we model the distribution of GDP per employee across German districts using two-component normal mixtures. While in the first year after unification, the two-component distributions were clearly separated and bimodal, corresponding to the East and West German districts, respectively, in the following years they started to merge showing only one mode. Still, using the recently developed EM-test for homogeneity in normal mixtures, the hypothesis of just a single normal component for the whole distribution is clearly rejected for all years. A Posterior analysis shows that about a third of the East German districts were assigned to the richer component in 2006, thus catching up to levels of the West. The growth rate of a mover district is about 1% point higher than the growth rate of a non-mover district which had the same initial level of GDP per employee.
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Acknowledgments
We are grateful to two anonymous referees for valuable suggestions that considerably improved this paper. We also gratefully acknowledge financial support from the German Research Foundation (HO 3260/3-1, KL 1260/9-1 and VO 1592/3-1), the German Academic Exchange Service (Vollmer), the Claussen-Simon Stiftung (Holzmann) and the Landesstiftung Baden-Württemberg (Holzmann).
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Vollmer, S., Holzmann, H., Ketterer, F. et al. Distribution dynamics of regional GDP per employee in unified Germany. Empir Econ 44, 491–509 (2013). https://doi.org/10.1007/s00181-011-0543-3
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DOI: https://doi.org/10.1007/s00181-011-0543-3