Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202453 
Year of Publication: 
2018
Series/Report no.: 
Research Report No. 2018-5
Publisher: 
The University of Western Ontario, Department of Economics, London (Ontario)
Abstract: 
After the 1990 unification, East Germany's capital income share plunged to 15.2 percent in 1991, then increased to 37.4 percent by 2015. To account for these large changes in the capital share, I model an economy that gains access to a higher productivity technology embodied in new plants. As existing low productivity plants decrease production, the capital share varies due to the non-convex production technology: plants require a minimum amount of labor to produce output. Two policies - transfers and government-mandated wage increases - have opposite effects on output growth, but contribute to lowering the capital share early in the transition.
Subjects: 
technological change
capital share
labor share
transfers
union markups
JEL: 
E20
E25
O11
Document Type: 
Working Paper

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