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Wages and Employment Growth: Disaggregated Evidence for West Germany

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Author Info
Suedekum, Jens () (University of Konstanz)
Blien, Uwe (Institute for Employment Research (IAB) and IZA Bonn)

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Abstract

We address the effects of wages on employment growth on the basis of a theoretical model from which cost and demand effects can be derived. In the empirical analysis we take a highly disaggregated perspective and apply a newly developed shift-share regression technique on an exhaustive and very accurate data set for West Germany. The regression shows that the impact of regional wages on employment growth is significantly negative. There is some variation of this effect across sectors, but in no case we find support for the claim that an exogenous wage increase leads to higher employment growth.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1128.

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Length: 33 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1128

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Related research
Keywords: employment growth; shift-share-analysis; regional wages; purchasing power argument;

Other versions of this item:

Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Jürgen Jerger & Oliver Landmann, 2002. "Lohnpolitik und Beschäftigung - Debatte ohne Ende?," Perspektiven der Wirtschaftspolitik, Blackwell Publishing, vol. 3(2), pages 207-224, 05. [Downloadable!] (restricted)
  2. Thórarinn G. Pétursson & Torsten Sløk, 2001. "Wage formation and employment in a cointegrated VAR model," Econometrics Journal, Royal Economic Society, vol. 4(2), pages 2.
  3. Uwe Blien & Katja Wolf, 2002. "Regional development of employment in eastern Germany: an analysis with an econometric analogue to shift-share techniques," Papers in Regional Science, Springer, vol. 81(3), pages 391-414. [Downloadable!] (restricted)
  4. Blien, Uwe & Wolf, Katja, 2002. "Regional development of employment in eastern Germany. An analysis with an econometric analogue to shift-share techniques," ERSA conference papers ersa02p263, European Regional Science Association. [Downloadable!]
  5. Jens Suedekum, 2004. "Selective migration, union wage setting and unemployment disparities in West Germany," International Economic Journal, Korean International Economic Association, vol. 18(1), pages 33-48, March. [Downloadable!] (restricted)
  6. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December. [Downloadable!] (restricted)
    Other versions:
  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
  8. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
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  10. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(2), pages 284-314, June. [Downloadable!] (restricted)
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  11. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Takatoshi Tabuchi, 2001. "On Interregional Price Differentials," The Japanese Economic Review, Japanese Economic Association, vol. 52(1), pages 104-115. [Downloadable!] (restricted)
  13. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-98, June. [Downloadable!] (restricted)
  14. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR, CES, MSH, vol. 16(32), pages 205-253, 04. [Downloadable!] (restricted)
  15. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December. [Downloadable!] (restricted)
  16. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September. [Downloadable!] (restricted)
  17. Ron Martin, Peter Tyler, 2000. "Regional Employment Evolutions in the European Union: A Preliminary Analysis," Regional Studies, Taylor and Francis Journals, vol. 34(7), pages 601-616, October. [Downloadable!] (restricted)
  18. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hans-Friedrich Eckey & Reinhold Kosfeld & Matthias Türck, 2005. "Regional Convergence in Germany. A Geographically Weighted Regression Approach," Discussion Papers in Economics 76/05, University of Kassel, Institute of Economics. [Downloadable!]
    Other versions:
  2. Uwe Blien & Jens Suedekum & Katja Wolf, 2005. "Local Employment Growth in West Germany: A Dynamic Panel Approach," IZA Discussion Papers 1723, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Suedekum, Jens, 2004. "Concentration and Specialisation Trends in Germany since Reunification," Discussion Paper Series 26294, Hamburg Institute of International Economics. [Downloadable!]
    Other versions:
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