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Wages and Employment Growth: Disaggregated Evidence for West Germany

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Author Info

  • Suedekum, Jens

    ()
    (Heinrich Heine University Düsseldorf)

  • Blien, Uwe

    ()
    (Institute for Employment Research (IAB), Nuremberg)

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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Bibliographic 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:
Publication status: published as 'Stimulating employment growth with higher wages? A new approach to address an old controversy' in: Kyklos, 2007, 60 (3), 441-467
Handle: RePEc:iza:izadps:dp1128

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

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Citations

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Cited by:
  1. Schlitte, Friso, 2010. "Local human capital, segregation by skill, and skill-specific employment growth," HWWI Research Papers, Hamburg Institute of International Economics (HWWI) 1-32, Hamburg Institute of International Economics (HWWI).
  2. Ulrich Zierahn, 2012. "The importance of spatial autocorrelation for regional employment growth in Germany," Jahrbuch für Regionalwissenschaft, Springer, Springer, vol. 32(1), pages 19-43, March.
  3. Vasilescu, Denisa Maria & Aparaschivei, Larisa & Roman, Mihai Daniel, 2012. "Employment in Romania: evidence from a panel data analysis," MPRA Paper 38388, University Library of Munich, Germany.
  4. Uwe Blien & Jens Suedekum & Katja Wolf, 2005. "Local Employment Growth in West Germany - A Dynamic Panel Approach," ERSA conference papers ersa05p620, European Regional Science Association.
  5. Suedekum, Jens, 2004. "Concentration and Specialisation Trends in Germany since Reunification," HWWA Discussion Papers, Hamburg Institute of International Economics (HWWA) 285, Hamburg Institute of International Economics (HWWA).

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