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Seniority in Germany: New Evidence on Returns to Tenure for Male Full-time Workers

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  • Robert Orlowski
  • Regina T. Riphahn

Abstract

This study uses recent data taken from the German Socioeconomic Panel (2002-2006) to evaluate the extent of and heterogeneity in returns to tenure for men in East and West Germany, employed in both the private and the public sector. We find significantly different wage patterns in East- and West Germany as well as between the private and public sector. Independent of the particular subsample, the application of the Altonji-Shakotko estimation approach yields minute and insignificant returns to tenure and more substantial returns to experience. The profile of the East German wage structure is surprisingly flat: after the first ten years of experience - and in contrast to the situation in West Germany - there appear to be no returns to additional general human capital.

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File URL: http://www.bgpe.de/texte/DP/036_orlowski_riphahn.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 036.

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Length: 31 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:bav:wpaper:036_orlowski_riphahn

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Web page: http://www.bgpe.de/
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Keywords: returns to tenure; seniority; earnings patterns; private and public sector;

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References

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  1. Riphahn, Regina T., 2004. "Employment protection and effort among German employees," Economics Letters, Elsevier, vol. 85(3), pages 353-357, December.
  2. Amann, Roland A. & Klein, Tobias J., 2007. "Returns to Type or Tenure?," IZA Discussion Papers 2773, Institute for the Study of Labor (IZA).
  3. Parent, Daniel, 2000. "Industry-Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 306-23, April.
  4. Katrin Schleife, 2006. "Computer Use and Employment Status of Older Workers - An Analysis Based on Individual Data," LABOUR, CEIS, vol. 20(2), pages 325-348, 06.
  5. Balestra, Pietro & Varadharajan-Krishnakumar, Jayalakshmi, 1987. "Full Information Estimations of a System of Simultaneous Equations with Error Component Structure," Econometric Theory, Cambridge University Press, vol. 3(02), pages 223-246, April.
  6. Heitmueller, Axel & Mavromaras, Kostas G., 2005. "On the Post-Unification Development of Public and Private Pay in Germany," IZA Discussion Papers 1696, Institute for the Study of Labor (IZA).
  7. Elke Holst & Dean R. Lillard & Thomas A. DiPrete, 2001. "Proceedings of the 2000 Fourth International Conference of German Socio-Economic Panel Study Users (GSOEP 2000): Editorial Introduction," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 5-6.
  8. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  9. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
  10. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
  11. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 437-59, July.
  12. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
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