Working Paper: CEPR ID: DP4597
Authors: Stephen N. Broadberry
Abstract: Germany overtook Britain in comparative productivity levels for the whole economy primarily as a result of trends in services rather than trends in industry. Britain?s productivity lead in services before World War II reflected external economies of scale in a highly urbanised economy with an international orientation. Low productivity in Germany reflected the under-development of services in an economy that was slow to move out of agriculture. As German agricultural employment contracted sharply from the 1950s, catching-up occurred in services. This was aided by a sharp increase in human and physical capital accumulation, underpinned by the institutional framework of the postwar settlement.
Keywords: Britain; Germany; Productivity; Services
JEL Codes: N10; N30; O40; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Shift of labor from agriculture to services (O14) | Increased productivity in Germany (O49) |
| Investments in human and physical capital (E22) | Increased productivity in Germany (O49) |
| Postwar settlement in Germany (N44) | Facilitated vocational training in services (M53) |
| Facilitated vocational training in services (M53) | Increased productivity in Germany (O49) |
| Germany's comparative productivity levels (O52) | Overtook Britain in overall productivity levels (N14) |
| High urbanization levels and international orientation in Britain (N93) | Bolstered service productivity (O49) |
| Introduction of modern office technology in Britain (N84) | Higher productivity in services (O49) |
| Post-World War II labor shifts (J29) | Comparative productivity levels in Germany (O49) |