May 2009

IZA DP No. 4177: A Distribution Dynamics Approach to Regional GDP Convergence in Unified Germany

published in: Empirical Economics, 2009, 37 (3), 627 - 652

This paper uses nonparametric techniques to study GDP convergence across German labor market regions and counties during the period 1992-2004. The main result is that regional convergence in unified Germany has been substantial. In the first years after German unification the distribution of GDP has been characterized by a pronounced bimodality. The dispersion of the GDP distribution has become substantially smaller over time. Although some bimodality remains in most recent years, this bimodality is weak in comparison to previous years. Nevertheless, disparities among regions located in the Eastern and Western part of the country are still apparent.