DONDENA Seminar Series FALL 10/10/2022

You may follow the seminar online via ZOOM Meetings at the following link: https://unibocconi-it.zoom.us/j/92287102577

"Reversing Fortunes of German Regions, 1926-2019: Boon and Bane of Early Industrialization?" (with Paul Berbée and Richard Franke)

Abstract

We show that 19th-century industrialization is an important determinant of the significant changes in Germany's economic geography observed in recent decades. Using novel data on regional economic activity, we establish that nearly half of West Germany's 163 labor markets experienced a reversal of fortune between 1926 and 2019, i.e., they moved from the lower to the upper median of the income distribution or vice versa. Economic decline is concentrated in North Germany, economic ascent in the South. Exploiting plausibly exogenous variation in access to coal, we show that early industrialization turned from an advantage

for economic development to a burden after World War II. The dominant position of heavy industry, supported by the local political-administrative system, limited regional adaptability when the old industries fell into crisis. Today, the early industrialized regions suffer from low innovation and deindustrialization. The (time-varying) effect of industrialization explains most of the decline in regional inequality observed in the 1960s and 1970s and about half of the current north-south gap in economic development. The talk concludes with a brief discussion of selective immigration as a complementary explanation for the economic rise of the Germany’s Southeast after 1945.

Bio

Sebastian Braun is Professor of Economics at the University of Bayreuth where he holds the chair for Quantitative Economic History. He is also a Research Fellow at the Centre for Research and Analysis of Migration (CReAM), IZA – Institute of Labor Economics, the Kiel Institute for the World Economy, and RWI – Leibniz Institute for Economic Research. Before joining the University of Bayreuth, he was an Associate Professor at the University of St Andrews. His research interests are in international economics, labour economics, and quantitative economic history. Sebastian earned his Ph.D. in Economics from Humboldt-Universität zu Berlin.