Reversing fortunes of German regions, 1926–2019 : Boon and bane of early industrialization?

DOI zum Zitieren der Version auf EPub Bayreuth: https://doi.org/10.15495/EPub_UBT_00008271
URN to cite this document: urn:nbn:de:bvb:703-epub-8271-7

Title data

Berbée, Paul ; Braun, Sebastian Till ; Franke, Richard:
Reversing fortunes of German regions, 1926–2019 : Boon and bane of early industrialization?
In: Journal of Economic Growth. (2024) .
ISSN 1573-7020
DOI der Verlagsversion: https://doi.org/10.1007/s10887-024-09247-x

	Format: PDF Name: s10887-024-09247-x.pdf Version: Published Version Available under License Creative Commons BY 4.0: Attribution
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Project information

Project financing:	Deutsche Forschungsgemeinschaft

Abstract

This paper shows that nineteenth-century industrialization is an essential determinant of the pronounced changes in economic prosperity across German regions over the last 100 years. Using novel data on economic activity in 163 labor market regions in West Germany, we find that nearly half of them experienced a reversal of fortune, moving from the lower to the upper median of the income distribution or vice versa, between 1926 and 2019. Exploiting plausibly exogenous variation in access to coal, we show that early industrialization led to a massive decline in the per capita income rank after World War II, as it turned from an asset to economic development into a liability. We present evidence consistent with the view that early industrialization created a lopsided economic structure dominated by large firms, which reduced adaptive capacity and local innovation. The (time-varying) effect of industrialization explains most of the decline in regional inequality observed in Germany in the 1960s and 1970s and more than half of the current North-South gap in economic development.

Further data

Item Type:	Article in a journal
Keywords:	Industrialization; Economic development; Regional inequality
DDC Subjects:	300 Social sciences > 330 Economics
Institutions of the University:	Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VII: Quantitative Economic History > Chair Economics VII: Quantitative Economic History - Univ.-Prof. Dr. Sebastian Till Braun Faculties Faculties > Faculty of Law, Business and Economics Faculties > Faculty of Law, Business and Economics > Department of Economics Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VII: Quantitative Economic History
Language:	English
Originates at UBT:	Yes
URN:	urn:nbn:de:bvb:703-epub-8271-7
Date Deposited:	04 Mar 2025 09:42
Last Modified:	04 Mar 2025 09:43
URI:	https://epub.uni-bayreuth.de/id/eprint/8271

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