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How does experience and job mobility determine wage gain in a transition and a non-transition economy? : the case of east and west Germany

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  • Wolff, Joachim

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

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    Abstract

    "This paper studies individual log real wage change of east and west Germans over the period 1990/91 to 1995/96 using data from the German Socio-economic Panel. Parameters are estimated by median regression. Human capital theory and job mobility theories have implications for wage changes that differ between a transition and a non-transition economy. Wage changes decrease in experience according to human capital theory. But during a transition shock the introduction of new production techniques implies that experienced and inexperienced workers invest similarly in on-the-job training. Hence, annual wage changes do not vary much with experience. The estimation results reflect this difference. Matching and on-the-job search theory imply the following: A higher a worker's experience the higher his/her match quality and in turn the less (more) he/she can gain (lose) from an additional voluntary (involuntary) job change. But a transition shock destroys the high match quality of many experienced workers' jobs, so that wage changes due to voluntary and involuntary job change vary less with experience in a transition country than in a non-transition country. For involuntary job change, I find evidence for this hypothesis. Causal effects of job mobility on wages are estimated by comparing wage changes of this period movers with wage changes of next period movers. The results show that voluntary job changes raise real wages of both east and west Germans; involuntary changes tend to lower real hourly wages." (Author's abstract, IAB-Doku) ((en))

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    Bibliographic Info

    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200627.

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    Length: 33 pages
    Date of creation: 14 Dec 2006
    Date of revision:
    Handle: RePEc:iab:iabdpa:200627

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    Keywords: Lohnentwicklung; Lohnerhöhung; Berufserfahrung - Auswirkungen; berufliche Mobilität - Auswirkungen; regionaler Vergleich; Reallohn; Sozioökonomisches Panel; Humankapitalansatz; on-the-job training; Bildungsinvestitionen; Bildungsertrag; Einkommenseffekte; Arbeitsplatzwechsel; Freiwilligkeit; Transformationstheorie; Volkswirtschaftstheorie; osteuropäischer Transformationsprozess; matching - Qualität; Ostdeutschland; Westdeutschland; Bundesrepublik Deutschland;

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    1. Alan B. Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Working Papers 4154, National Bureau of Economic Research, Inc.
    2. Jennifer Hunt, 1999. "Post-Unification Wage Growth in East Germany," NBER Working Papers 6878, National Bureau of Economic Research, Inc.
    3. Wolfgang Franz & Viktor Steiner, 2000. "Wages in the East German Transition Process: Facts and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 241-269, 08.
    4. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    5. Jacob Mincer, 1986. "Wage Changes in Job Changes," NBER Working Papers 1907, National Bureau of Economic Research, Inc.
    6. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December.
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