The German wage curve: Evidence from the IAB employment sample

Badi H. Baltagi, Uwe Blien

Research output: Contribution to journalArticle

57 Scopus citations

Abstract

This paper examines the German wage curve using the Institut für Arbeitsmarkt und Berufsforschung (IAB) employment sample over the period 1981-1990. A random sample of 6590 employees covering 142 labor market regions over a ten year period is considered. The total number of observations is 40 852. Taking into account the endogeneity of unemployment as well as controlling for region and time effects, this paper finds support for the wage curve in Germany. The overall unemployment elasticity estimate is -0.07 and is higher for younger workers than older workers. The wages of less qualified workers are more responsive to local unemployment rates than the wages of more qualified workers. Also the wages of men are slightly more responsive to local unemployment rates than the wages of women. Ignoring endogeneity of the local unemployment rate yields results in favor of the wage curve only for younger and less qualified workers. Accounting for endogeneity of the unemployment rate yields evidence in favor of the wage curve across all types of workers.

Original languageEnglish (US)
Pages (from-to)135-142
Number of pages8
JournalEconomics Letters
Volume61
Issue number2
StatePublished - Nov 1 1998
Externally publishedYes

Keywords

  • C23
  • Fixed Effects
  • J30
  • J60
  • Panel Data
  • Random effects
  • Wage Curve

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'The German wage curve: Evidence from the IAB employment sample'. Together they form a unique fingerprint.

  • Cite this