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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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  • Freier, Ronny

    ()
    (Stockholm School of Economics)

  • Steiner, Viktor

    ()
    (Free University of Berlin)

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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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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2577.

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    Length: 29 pages
    Date of creation: Jan 2007
    Date of revision:
    Handle: RePEc:iza:izadps:dp2577

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

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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. 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.
    4. Falk, Martin & Koebel, Bertrand M., 2000. "A dynamic heterogeneous labour demand model for German manufacturing," ZEW Discussion Papers 00-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 45-62.
    6. Knoppik, Christoph & Beissinger, Thomas, 2001. "How Rigid are Nominal Wages? Evidence and Implications for Germany," IZA Discussion Papers 357, Institute for the Study of Labor (IZA).
    7. 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, vol. 124(2), pages 315-325.
    8. Falk, Martin & Koebel, Bertrand M, 2002. " Outsourcing, Imports and Labour Demand," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 567-86, December.
    9. 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.
    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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