We demonstrate that almost one half of the observed wage gap between East and West Germany reflects differences in worker, establishment, and regional characteristics rather than differences in productivity at the establishment level. Regional price and establishment size differentials alone...

This paper investigates whether localization economies as brought forward by Marshall (1890) or urbanization economies as mentioned by Jacobs (1970) are more decisive for regional gross value added per capita. Our novel approach is to explicitly allow for interdependencies between these two...