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Wage Rigidities in Western Germany? Microeconometric Evidence from the 1990s

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  • Puhani, Patrick A.

    ()
    (Leibniz University of Hannover)

Abstract

This paper investigates whether and in what sense the west German wage structure has been ‘rigid’ in the 1990s. To test the hypothesis that a rigid wage structure has been responsible for rising low-skilled unemployment, I propose a methodology which makes less restrictive identifying assumptions than some previous related work. I find that the relative stability of educational wage premia was justified by market forces. However, relative wages did not respond to negative net demand shocks for young workers, as well as white-collar workers.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 334.

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Length: 66 pages
Date of creation: Jul 2001
Date of revision:
Handle: RePEc:iza:izadps:dp334

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Keywords: Wages; unemployment; rigidities; identification; Germany;

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