Science after Communism: Why does Westernization Correlate with Productivity?
59 Pages Posted: 14 Nov 2021 Last revised: 16 Aug 2022
Date Written: July 1, 2022
How do institutional structures affect the productivity in innovative sectors? Using German re-unification as a natural experiment, we analyze the effect of institutional change in the East German academic system on the scientific productivity of East German scientists in the research fields of science, technology, engineering, mathematics, and medicine (STEMM). We find a strong correlation between restructuring of the East German academic system and the productivity of East German scientists. To identify the causal effects that yield this correlation, we investigate to what extent the observed productivity is brought about by efficiency gains and to what extent by reallocation. We analyze difference-in-differences in productivity, collaboration, field switching behavior, and attrition of the treatment and non-treatment groups of East German scientists. We find reallocation between fields or attrition to be the dominant feature that underlies East German scientists' productivity differences when institutional effects are isolated. Our findings have implications for the effects of increased competition in today's academic environment.
Keywords: Productivity; Peer Effects; Institutions; Competition; Reallocation; East Germany
JEL Classification: D24, I23, J24, O32, O33
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