Skill wage premia, employment, and cohort effects
Subtitle: are workers in Germany all of the same type?
By: by Bernd Fitzenberger, Karsten Kohn
Contributors: Kohn, Karsten
Series: Discussion paper -- no. 2185; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2185
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] :
Subjects: Wages; History
Description: "This paper studies the relationship between employment and wage structures in West Germany based on the IAB employment subsample 1975-1997. It extends the analytical framework of Card and Lemieux (2001) which simultaneously includes skill and age as important dimensions of heterogeneity. After having identified cohort effects in skill wage premia and in the evolution of relative employment measures, we estimate elasticities of substitution between employees in three different skill groups and between those of different age, taking account of the endogeneity of wages and employment. Compared to estimates in the related literature, we find a rather high degree of substitutability. Drawing on the estimated parameters, we simulate the magnitude of wage changes within the respective skill groups that would have been necessary to halve skill-specific unemployment rates in 1997. The required nominal wage reductions range from 8.8 to 12.2% and are the higher the lower the employees' skill level"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 6/30/2006.

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