IDEAS home Printed from https://ideas.repec.org/a/bla/kyklos/v60y2007i3p441-464.html
   My bibliography  Save this article

Stimulating Employment Growth with Higher Wages? A New Approach to Addressing an Old Controversy

Author

Listed:
  • Jens Suedekum
  • Uwe Blien

Abstract

We analyse the impact of wages on employment growth in West German local industries (1993–2002), addressing the tension between cost and potentially offsetting demand side effects. We construct a neutralised regional wage level that is detached from various productivity influences. A positive value implies ‘overly high’ labour costs, but also high local purchasing power. A subsequent employment growth regression yields significantly negative effects associated with this indicator. Cost push effects dominate, but our estimates suggest that demand side repercussions have a mitigating effect. There is considerable variation across industries, but in no case we find a positive employment reaction.

Suggested Citation

  • Jens Suedekum & Uwe Blien, 2007. "Stimulating Employment Growth with Higher Wages? A New Approach to Addressing an Old Controversy," Kyklos, Wiley Blackwell, vol. 60(3), pages 441-464, August.
    • Handle: RePEc:bla:kyklos:v:60:y:2007:i:3:p:441-464
    DOI: 10.1111/j.1467-6435.2007.00379.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6435.2007.00379.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-6435.2007.00379.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," Working Papers 769, Princeton University, Department of Economics, Industrial Relations Section..
    2. Alan Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," Working Papers 769, Princeton University, Department of Economics, Industrial Relations Section..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ulrich Zierahn, 2012. "The importance of spatial autocorrelation for regional employment growth in Germany," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 32(1), pages 19-43, March.
    2. Uwe Blien & Lutz Eigenhueller & Markus Promberger & Norbert Schanne, 2013. "The Shift-Share Regression: An Application to Regional Employ-ment Development," ERSA conference papers ersa13p614, European Regional Science Association.
    3. Raimund Krumm & Harald Strotmann, 2013. "The impact of regional location factors on job creation, job destruction and employment growth in manufacturing," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 23-48, February.
    4. Jacopo Canello, 2017. "Outward foreign direct investment, offshore outsourcing and local network resilience in industrial districts," European Planning Studies, Taylor & Francis Journals, vol. 25(2), pages 181-201, February.
    5. Camille Logeay & Sabine Stephan & Rudolf Zwiener, 2011. "Driving forces behind the sectoral wage costs differentials in Europe," IMK Working Paper 10-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Raimund Krumm & Harald Strotmann, 2010. "The Impact of Regional Supply and Demand Conditions on Job Creation and Destruction," IAW Discussion Papers 61, Institut für Angewandte Wirtschaftsforschung (IAW).
    7. Lu, Lan & Yin, Shuiying & Wen, Fuying & Xu, Qingqing, 2023. "The spatial structure of labour force employment in China’s industries: Measurement and extraction," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 472-486.
    8. Khaled Thabet, 2015. "Industrial structure and total factor productivity: the Tunisian manufacturing sector between 1998 and 2004," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 639-662, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ronald Schettkat & Rongrong Sun, 2009. "Monetary policy and European unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 94-108, Spring.
    2. Nathalie Chusseau & Michel Dumont, 2012. "Growing Income Inequalities in Advanced," Working Papers hal-00993359, HAL.
    3. Ronald Schettkat & Rongrong Sun, 2009. "Nicht zu früh bremsen! - Der Einfluss der Geldpolitik auf die langfristige Wirtschaftsentwicklung in Deutschland und den USA-," Schumpeter Discussion Papers sdp09003, Universitätsbibliothek Wuppertal, University Library.
    4. Sonja Jovicic, 2015. "Wage Inequality, Skill Inequality, and Employment: Evidence from PIAAC," Schumpeter Discussion Papers SDP15007, Universitätsbibliothek Wuppertal, University Library.
    5. Paul Beaudry & David A. Green & Ben M. Sand, 2018. "In Search of Labor Demand," American Economic Review, American Economic Association, vol. 108(9), pages 2714-2757, September.
    6. Monique Ebell & Christian Haefke, 2009. "Product Market Deregulation and the U.S. Employment Miracle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 479-504, July.
    7. Amelie Constant & Yochanan Shachmurove, 2005. "The comparison of incomes of self-employed and salaried workers among German Nationals and immigrants," PIER Working Paper Archive 05-030, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    8. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages 121-149, February.
    9. Marianne Bertrand & Francis Kramarz, 2002. "Does Entry Regulation Hinder Job Creation? Evidence from the French Retail Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1369-1413.
    10. John T. Addison & Paulino Teixeira & Jean‐Luc Grosso, 2000. "The Effect of Dismissals Protection on Employment: More on a Vexed Theme," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 105-122, July.
    11. Batyra, Anna & Sneessens, Henri R., 2010. "Selective reductions in labor taxation: Labor market adjustments and macroeconomic performance," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 531-543, July.
    12. Stefan Fölster & Li Jansson & Anton Nyrenström Gidehag, 2016. "The effect of local business climate on employment," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(1), pages 2-24, April.
    13. Romain Duval & Jørgen Elmeskov, 2005. "The Effects of EMU on Structural Reforms in Labour and Product Markets," OECD Economics Department Working Papers 438, OECD Publishing.
    14. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    15. D'Agostino, Antonello & Serafini, Roberta & Ward-Warmedinger, Melanie E., 2006. "Sectoral Explanations of Employment in Europe: The Role of Services," IZA Discussion Papers 2257, Institute of Labor Economics (IZA).
    16. Linzert, Tobias, 2005. "The Unemployment Inflation Trade-Off in the Euro Area," IZA Discussion Papers 1699, Institute of Labor Economics (IZA).
    17. Andrew Glyn & Wiemer Salverda, 1999. "Employment Inequalities," Economics Working Paper Archive wp_293, Levy Economics Institute.
    18. Daniel Fernandez Kranz, 2006. "Why has wage inequality increased more in the USA than in Europe? An empirical investigation of the demand and supply of skill," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 771-788.
    19. Acs, Zoltan J. & Armington, Catherine, 2004. "The impact of geographic differences in human capital on service firm formation rates," Journal of Urban Economics, Elsevier, vol. 56(2), pages 244-278, September.
    20. Thomas Piketty, 1998. "L'emploi dans les services en France et aux États-Unis : une analyse structurelle sur longue période," Économie et Statistique, Programme National Persée, vol. 318(1), pages 73-99.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:kyklos:v:60:y:2007:i:3:p:441-464. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.