The Unbearable Stability of the German Wage Structure: Evidence and Interpretation
IMF Working Papers, January 1, 2000
Source details
- Canonical URL
- The Unbearable Stability of the German Wage Structure: Evidence and Interpretation
Other formats
Bibliographic details
- Authors: Eswar S Prasad
- Published: January 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451843965.001
Summary
- The paper uses micro data from the German Socio-Economic Panel to document that the wage structure in West Germany was remarkably stable during 1984-97.
- There was little variation over time in wage or earnings inequality between and within different skill groups.
- Empirical evidence suggests this stability is attributable to institutional factors rather than market forces.
- The rigidity of relative wages, despite relative shifts in labor demand that favor skilled workers, has resulted in sharp declines in employment rates for unskilled workers.
- The microeconomic evidence has important implications for interpreting trends in wage shares, capital-labor ratios, and aggregate unemployment.
Key findings and statistics
- Time period analyzed: 1984-97.
- Geographic focus: West Germany.
- Pages: 52.
- Volume: 2000.
- Issue: 022.
- Series: Working Paper No. 2000/022.
- DOI: https://doi.org/10.5089/9781451843965.001.
- Stock No: WPIEA0222000.
- ISBN: 9781451843965.
- ISSN: 1018-5941.
Empirical evidence and interpretation
- Microdata from the German Socio-Economic Panel are used to examine wage and earnings inequality by skill group.
- Observed stability in the wage structure is linked to institutional factors (as opposed to market forces) in the authors’ empirical results.
- Relative wages displayed rigidity even when labor demand shifted in favor of skilled workers.
- The wage rigidity is associated with sharp declines in employment rates for unskilled workers, indicating distributional and labor-market access effects.
Implications for macro aggregates and labor-market measures
- The microeconomic patterns inform interpretation of:
- Trends in wage shares,
- Capital-labor ratios,
- Aggregate unemployment.
Subject headings and keywords (as provided)
- Subjects: Income inequality, Labor, Labor markets, National accounts, Wage adjustments, Wage structure, Wages.
- Keywords: employment share, Income inequality, labor market experience, labor market outcomes across skill groups, Labor markets, net effect, percentile differential, quantile regression, returns to human capital, selection effect, skill price, standard deviation, supply shock, unskilled worker, Wage adjustments, Wage and earnings inequality, wage distribution, wage inequality, wage regression, Wage structure, Wages, WP.
The Unbearable Stability of the German Wage Structure: Evidence and Interpretation — Eswar S Prasad, January 1, 2000 (IMF Working Papers 2000, 022).
Content in this bundle
- The Unbearable Stability of the German Wage Structure: Evidence and Interpretation - WP/00/22