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Sectoral Transformation, Turbulence, and Labour Market Dynamics in Germany

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  • Bachmann, Ronald
  • Burda, Michael C

Abstract

The secular rise of European unemployment since the 1960s is hard to explain without reference to structural change. This is especially true in Germany, where industrial employment has declined by more than 30% and service sector employment has more than doubled over the past three decades. Using individual transition data on West German workers, we document a marked increase in structural change and turbulence, in particular since 1990. Net employment changes resulted partly from an increase in gross flows, but also from an increase in the net transition "yield" at any given gross worker turnover. In growing sectors, net structural change was driven by accessions from nonparticipation rather than unemployment; contracting sectors reduced their net employment primarily via lower accessions from nonparticipation. While gross turnover is cyclically sensitive and strongly procyclical, net reallocation is countercyclical, meaning that recessions are associated with increased intensity of sectoral reallocation. Beyond this cyclical component, German reunification and Eastern enlargement appear to have contributed significantly to this accelerated pace of structural change.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6226.

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Date of creation: Mar 2007
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Handle: RePEc:cpr:ceprdp:6226

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Keywords: gross worker flows; sectoral and occupational mobility; turbulence;

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Cited by:
  1. Ronald Bachmann & Michael C. Burda, 2010. "Sectoral Transformation, Turbulence and Labor Market Dynamics in Germany," German Economic Review, Verein für Socialpolitik, vol. 11, pages 37-59, 02.
  2. Brian Silverstone & Will Bell, 2011. "Gross Labour Market Flows in New Zealand: Some Questions and Answers," Working Papers in Economics 11/15, University of Waikato, Department of Economics.
  3. Sepp, Jüri, 2009. "Industriestruktur als Ursache für Produktivitätsunterschiede in Europa: Das Beispiel Estland," Discussion Papers 1/09, Europa-Kolleg Hamburg, Institute for European Integration.
  4. Walter Krämer, 2011. "The cult of statistical signicance. What economists should and should not do to make their data talk," Working Paper Series of the German Council for Social and Economic Data 176, German Council for Social and Economic Data (RatSWD).
  5. Ronald Bachmann & Sebastian Braun, 2011. "The Impact Of International Outsourcing On Labour Market Dynamics In Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(1), pages 1-28, February.
  6. Michael C. Burda, 2007. "What kind of shock was it? Regional Integration and Structural Change in Germany after Unification," Kiel Working Papers 1306, Kiel Institute for the World Economy.
  7. Stephan Humpert, 2012. "Age and Gender Differences in Job Opportunities," Working Paper Series in Economics 235, University of Lüneburg, Institute of Economics.

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