Distribution Dynamics of Regional GDP per Employee in Unified Germany

We investigate to what extent convergence in production levels per worker has beenachieved in Germany since unification. To this end, we model the distributionof GDP per employee across German districts using two-component normal mixtures.While in the first year after unification, the two component distributionswere clearly separated and bimodal, corresponding to the East and West Germandistricts, respectively, in the following years they started to merge showing only onemode. Still, using the recently developed EM-Test for homogeneity in normal mixtures,the hypothesis of just a single normal component for the whole distribution isclearly rejected for all years...