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A Tale of Two Tails: Establishment Size and Labour Productivity in United States and German Manufacturing at the Start of the Twentieth Century
Author(s) -
Veenstra Joost,
Jong Herman
Publication year - 2016
Publication title -
australian economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.493
H-Index - 16
eISSN - 1467-8446
pISSN - 0004-8992
DOI - 10.1111/aehr.12100
Subject(s) - german , productivity , redistribution (election) , distribution (mathematics) , economics , labour economics , demographic economics , geography , political science , economic growth , mathematics , mathematical analysis , archaeology , politics , law
This paper studies the importance of establishment size for the German/US labour‐productivity gap in manufacturing at the start of the twentieth century. First, we show that the left tail of the employment distribution by establishment size was larger in Germany than in the USA. Second, using US state data for 1909, we find a positive correlation between establishment size and labour productivity. Third, imposing the coefficients of these estimates on establishment‐size differences between Germany and the USA, we calculate that a redistribution of German employment to larger establishments, as in the USA, reduces the labour‐productivity gap by about 25 per cent.