European Economy. Economic Papers. Germany's growth performance in the 1990's

1.2.5 Growth accounting
The previous sub-sections point to the fact that weak employment growth has been one of the
salient features of the German economy in recent years. To get a somewhat fuller picture
about the factors behind the slowdown in German output growth in the period after the re-
unification boom this sub-section uses a traditional growth accounting framework to quantify
the contributions from labour input, capital input and technological progress to overall output
growth. However, due to the lack of comparable cross-country data for employment in full-
time equivalents in the period under consideration the labour input indicator used in this
exercise is the number of employed persons. As shown above, in the case of Germany this
introduces a significant upward bias in the contribution from labour input to growth during
the 1990s which has to be borne in mind when interpreting the results.

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Table 1.8 shows that, in conformity with the results above, in Germany the growth
contribution from labour input has been weak throughout the past three decades. Despite an
apparent improvement since the mid-1990s in relation to the longer-term average, in
comparative terms this tendency has become even more accentuated in recent years. More
specifically, during the period 1996-2000 the labour input contribution to output growth rose
by around ½ percentage point for the EMU/EU partner countries whereas in Germany the
increase amounted to only about one half of this value. Moreover, as mentioned before the
contribution from labour input to output growth in the 1990s would be further weakened if as
a measure of labour input full-time equivalents were used instead of persons employed. This
would result in a 
negative
growth contribution from labour input of around 0.8% for the first
half of the decade and of some 0.1% of GDP for the second half.