After 20 years of transition, productivity in Eastern Germany is still considerably below the Western level. We study the development of the East-West productivity gap at the firm level and link it to firms' product policy. Redesigning their product range was a major challenge for Eastern...

Since Eastern Germany's conversion to a market economy wages have remained considerably below the West German wage level. This article looks at the role of establishment-specific factors—such as sectoral affiliation and size of the labour force—in this process. A non-parametric decomposition...