Labour productivity and convergence within Europe: East German and Irish experience

The convergence of labour productivity within an economic area involves the closing of organisation, idea and object gaps. This process can be exogenous or endogenous. We provide evidence for both for East German labour productivity. We argue that labour productivity there has caught up faster than elsewhere. The formation of German Monetary Union was followed by migration of workers to West Germany, and reorganisation and privatisation of East German firms. We find that within Europe only Ireland matches this speed of convergence and we explore the role played by education and multinational activity in the growth of Irish labour productivity.