The German Productivity Paradox

Published: 11.06.2019

  1. Only small spillover effects from U.S. technology changes on German labor productivity.
  2. A sizeable part of the slowdown in German productivity growth is a side effect of the labor market performance since the year 2005. The successful integration of five million people into the labor market caused an attenuating effect on productivity growth as many of these new workers exhibit comparatively low levels of productivity.
  3. Technological progress originating in the ICT-producing sector has significant positive effects on GDP and employment. The net effect on labor productivity, however, is modest. Consequently, increasing digitization leads to higher production and employment, but not to sizeable higher productivity
  4. For the years after 2012 technological progress in the ICT-producing sectors seems below which might also be an explanation for the German productivity paradox.
  • RWI - Leibniz-Institut für Wirtschaftsforschung, Essen, Germany
  • Ruhr-Universität Bochum (RUB), Department of Economics, Bochum, Germany
  • Technische Universität Dortmund, Department of Economic and Social Sciences, Dortmund, Germany
  • Universität Duisburg-Essen, Department of Economics, Essen, Germany