Wages and Employment Across Skill Groups

Beschreibung

This book explores empirically for West Germany whether a decline in the relative demand for less skilled workers resulted in increased unemployment. Using up-to-date econometric techniques, a balanced mixture between descriptive evidence and structural estimation is provided, and there are various findings in the book which require a modification of the conventional wisdom about labor market trends in West Germany. Overall wage dispersion has been increasing and wage growth has been higher for low-skilled and high-skilled workers compared to the medium skill group. A skill bias in labor demand trends is found and higher wage flexibility could have alleviated the dispersion in unemployment rates across skill groups. The main driving force appears to be technological progress, however, the evidence is also consistent with international trade causing a deterioration in the labor market position of low-skilled workers. With regard to wage bargaining, evidence for a short-run, but not for a long-run, moderation of wage demands is found in the presence of a negative labor demand shock.
For some time, it has been debated whether a lack of wage flexibility is at the roots of the high and persistent unemployment in West Germany. In the presence of a skill bias in labor demand, which increases the relative de mand for more highly skilled labor over time, there only seems to exist the choice between higher wage inequality or higher unemployment rates. This study scrutinizes whether and in what way this line of thought is consis tent with empirical findings for West Germany. The analysis ranges from extensive descriptive evidence on wage trends to the estimation of a struc tural model of wage bargaining. As the most important database, I use the IAB-Beschiiftigtenstichprobe from 1975 to 1990. This study was accepted as a Habilitation thesis by the Department of Economics and Statistics of the University of Konstanz in October 1998. The only major change relates to appendix B on the block bootstrap procedure now summarizing the main aspects of the method. I am very grateful to my advisor Prof. Dr. Wolfgang Franz for his support, encouragement, and inspiration. From 1993 to 1997, he ran the Center for International Labor Economics at the University of Konstanz in such a way that it provided a fruitful environment for empirical research in labor economics. I am also indebted to Prof. Dr. Winfried Pohlmeier and to Prof. Dr. Gerd Ronning for undertaking the task to evaluate my Habilitation thesis.

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Bernd Fitzenberger

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Arbeitslosigkeit Arbeitsmarkt Employment Labour Economics Simulation labor market unemployment

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