REVIEW Regional employment trends of wood-based industries in Germany’s forest cluster: a comparative shift-share analysis of post-reunification development Dajana Klein Uwe Kies Andreas Schulte Received: 5 May 2008 / Revised: 29 October 2008 / Accepted: 22 December 2008 Ó Springer-Verlag 2009 Abstract After reunification in 1990, Germany’s forest cluster developed anew and employment in the wood- based industries differentiated very quickly. With more than 900,000 employees, it is now considered one of the most important industrial sectors in the country. This paper analysed general trends in the development of employment of wood-based industries in the German forest cluster between 1999 and 2006. Shift-share analysis was consid- ered to be the most appropriate way to determine regional differences in the subsection DD/20 ‘Manufacture of wood and wood products’ of the code ‘‘Classification of Eco- nomic Activities in the European Community, Revision 1.1’’ (NACE): the sawmill industry, the wood-based panel industry, the wood construction industry, the wood-based packaging industry, and the miscellaneous wood products industry. This method decomposed the change of employment into three different components that are due to that change: national trends, (industrial) sectoral trends, and regional conditions. Employment in the selected wood- based industries showed a significantly larger decrease than overall trends in both the producing industries and the whole economy of Germany: a continual loss of employees could be observed over the time period, affecting almost all of the selected wood-based industries. However, federal states in western and eastern Germany experienced diver- gent trends between 1999 and 2006, as different absolute and relative regional share components indicated in the shift-share analysis. This method allows of identifying regional disparities and characterising regions with positive (mainly eastern federal states) and negative (mainly wes- tern federal states) rates of employment growth. The research suggests that positive employment trends in eastern Germany’s wood-based industries can mainly be attributed to regional factors such as comparatively higher subsidies for new investments, lower labour costs, lower land values or infrastructural peculiarities. Keywords Shift-share analysis  Forest cluster  Wood-based industries  Labour market  Employment  Germany  Economic transformation process Introduction The economic development in the Federal Republic of Germany remains influenced by the economic transfor- mation process in the eastern federal states following the reunification of East Germany and West Germany 1 in 1990. 2 In terms of key labour market indicators, the eastern states continue to lag far behind western Germany. In 2006, the unemployment rate amounted to 17.3% in eastern Germany: far higher than in the western federal states with 9.1% (Bundesagentur fu ¨r Arbeit 2007). In addition to Germany’s reunification, changing market conditions in a globalised economy have led to a strong restructuring of the forest cluster, including redevelopment of the wood-based industries and rapid differentiation Communicated by M. Moog. D. Klein (&)  U. Kies  A. Schulte Wald-Zentrum, Westfa ¨lische Wilhelms-Universita ¨t Mu ¨nster, Robert-Koch-Str. 27, 48149 Munster, Germany e-mail: dajana.klein@wald-zentrum.de 1 For a general profile of the eastern and western federal states of Germany, see Table 1. 2 For an overview of the process of reunification and convergence of eastern and western Germany, see Lange and Pugh (1998). For a description of regional differences, see Blien et al. (2006) and Suedekum et al. (2006). 123 Eur J Forest Res DOI 10.1007/s10342-009-0258-6