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'Marginal Employment' and the Demand for Heterogenous Labour: Empirical Evidence from a Multi-factor Labour Demand Model for Germany

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  • Ronny Freier
  • Viktor Steiner
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    Abstract

    We develop a structural multi-factor labour demand model which distinguishes between eight labour categories including non-standard types of employment such as marginal employment. The model is estimated for both the number of workers and total working hours using a new panel data set. For unskilled and skilled workers in full-time employment, we find labour demand elasticities similar to previous estimates for the west German economy. Our new estimates of own-wage elasticities for marginal employment range between -.4 (number of male workers in west Germany) to -1 (working hours for women). We illustrate the implications of these estimates by simulating the likely labour demand effects of the recent increase of employers' social security contributions (SSC) on marginal employment in Germany.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.55725.de/dp662.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 662.

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    Length: 23 p.
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp662

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    Keywords: Multi-factor labour demand for heterogenous labour; marginal employment;

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    References

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    1. Morrison, Catherine J, 1988. "Quasi-Fixed Inputs in U.S. and Japanese Manufacturing: A Generalized Leontief Restricted Cost Function Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 275-87, May.
    2. Addison, John T. & Bellmann, Lutz & Schank, Thorsten & Teixeira, Paulino, 2005. "The Demand for Labor: An Analysis Using Matched Employer-Employee Data from the German LIAB. Will the High Unskilled Worker Own-Wage Elasticity Please Stand Up?," IZA Discussion Papers 1780, Institute for the Study of Labor (IZA).
    3. Falk, Martin & Koebel, Bertrand M., 2000. "A dynamic heterogeneous labour demand model for German manufacturing," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 00-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Christoph Knoppik & Thomas Beissinger, 2003. "How Rigid are Nominal Wages? Evidence and Implications for Germany," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(4), pages 619-641, December.
    5. Viktor Steiner & Katharina Wrohlich, 2004. "Work Incentives and Labor Supply Effects of the 'Mini-Jobs Reform' in Germany," Discussion Papers of DIW Berlin 438, DIW Berlin, German Institute for Economic Research.
    6. Iris Koch & Holger Meinken, 2004. "The Employment Panel of the German Federal Employment Agency," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 124(2), pages 315-325.
    7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    8. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 90(1), pages 45-62.
    9. Falk, Martin & Koebel, Bertrand M, 2002. " Outsourcing, Imports and Labour Demand," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 104(4), pages 567-86, December.
    10. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
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    Cited by:
    1. Freier, Ronny & Steiner, Viktor, 2007. "‘Marginal Employment’: Stepping Stone or Dead End? Evaluating the German Experience," IZA Discussion Papers 3175, Institute for the Study of Labor (IZA).
    2. Freier, Ronny & Steiner, Viktor, 2008. "Marginal employment: Stepping stone or dead end? : evaluating the German experience," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 223-243.
    3. repec:iab:iabzaf:v:41:i:2/3:p:223-243 is not listed on IDEAS
    4. Ronny Freier & Viktor Steiner, 2007. ""Marginal Employment": Stepping Stone or Dead End? Evaluating the German Experience," Discussion Papers of DIW Berlin 744, DIW Berlin, German Institute for Economic Research.
    5. Mueller, Kai-Uwe & Steiner, Viktor, 2013. "Behavioral effects of a federal minimum wage and income inequality in Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 79784, Verein für Socialpolitik / German Economic Association.

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