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Can a Task-Based Approach Explain the Recent Changes in the German Wage Structure?

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Author Info

  • Antonczyk, Dirk

    ()
    (Deloitte FAS LLP)

  • Fitzenberger, Bernd

    ()
    (University of Freiburg)

  • Leuschner, Ute

    ()
    (University of Freiburg)

Abstract

This paper investigates the changes in the German wage structure for full-time working males from 1999 to 2006. Our analysis builds on the task-based approach introduced by Autor et al. (2003), as implemented by Spitz-Oener (2006) for Germany, and also accounts for job complexity. We perform a Blinder-Oaxaca type decomposition of the changes in the entire wage distribution between 1999 and 2006 into the separate effects of personal characteristics and task assignments. In line with the literature, we find a noticeable increase of wage inequality between 1999 and 2006. The decomposition results show that the changes in personal characteristics explain some of the increase in wage inequality whereas the changes in task assignments strongly work towards reducing wage inequality. The coefficient effect for personal characteristics works towards an increase in wage inequality at the top of the wage distribution. The coefficient effect for the task assignments on the contrary shows an inverted U-shaped pattern. We conclude that altogether the task-based approach can not explain the recent increase of wage inequality 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 4050.

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Length: 44 pages
Date of creation: Feb 2009
Date of revision:
Publication status: published in: Jahrbücher für Nationalökonomie und Statistik, 2009, 229 (2-3), 214-238
Handle: RePEc:iza:izadps:dp4050

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Keywords: wage inequality; skill biased technical change; polarization; occupations; tasks;

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References

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  1. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  2. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  3. Pekkarinen, Tuomas & Vartiainen, Juhana, 2004. "Gender Differences in Job Assignment and Promotion on a Complexity Ladder of Jobs," IZA Discussion Papers 1184, Institute for the Study of Labor (IZA).
  4. Fairlie, Robert, 2014. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Santa Cruz Department of Economics, Working Paper Series qt49c4n0fg, Department of Economics, UC Santa Cruz.
  5. Bernd Fitzenberger & Karsten Kohn & Qingwei Wang, 2011. "The erosion of union membership in Germany: determinants, densities, decompositions," Journal of Population Economics, Springer, Springer, vol. 24(1), pages 141-165, January.
  6. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  7. van Ophem, Hans & Hartog, Joop & Vijverberg, Wim P M, 1993. "Job Complexity and Wages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(4), pages 853-72, November.
  8. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc.
  9. Gernandt, Johannes & Pfeiffer, Friedhelm, 2006. "Rising Wage Inequality in Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-19 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Alan Manning, 2004. "We can work it out: the impact of technological change on the demand for low skill workers," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19948, London School of Economics and Political Science, LSE Library.
  11. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U.S. Wage Inequality: Re-Assessing the Revisionists," NBER Working Papers 11627, National Bureau of Economic Research, Inc.
  12. Fitzenberger, Bernd & Kohn, Karsten, 2006. "Skill Wage Premia, Employment, and Cohort Effects: Are Workers in Germany All of the Same Type?," IZA Discussion Papers 2185, Institute for the Study of Labor (IZA).
  13. Dustmann, Christian & Ludsteck, Johannes & Schönberg, Uta, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA).
  14. Adam J. Grossberg & Paul Sicilian, 1999. "Minimum Wages, On-the-Job Training, and Wage Growth," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 65(3), pages 539-556, January.
  15. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(2), pages 235-270, April.
  16. Kohn, Karsten, 2006. "Rising Wage Dispersion, After All! The German Wage Structure at the Turn of the Century," IZA Discussion Papers 2098, Institute for the Study of Labor (IZA).
  17. Autor, David & Dorn, David, 2009. "Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States," IZA Discussion Papers 4290, Institute for the Study of Labor (IZA).
  18. Hartog, Joop & Vriend, Nick, 1990. "Young Mediterraneans in the Dutch Labour Market: A Comparative Analysis of Allocation and Earnings," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 379-401, April.
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Citations

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Cited by:
  1. Gordo, Laura Romeu & Skirbekk, Vegard, 2013. "Skill demand and the comparative advantage of age: Jobs tasks and earnings from the 1980s to the 2000s in Germany," Labour Economics, Elsevier, Elsevier, vol. 22(C), pages 61-69.
  2. Tobias Brändle & Andreas Koch, 2013. "Outsourcing Potentials and International Tradability of Jobs - Evidence from German Micro-Level Data," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 93, Institut für Angewandte Wirtschaftsforschung (IAW).
  3. Karsten Kohn & Dirk Antonczyk, 2013. "The aftermath of reunification," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 21(1), pages 73-110, 01.
  4. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," Labour Economics, Elsevier, Elsevier, vol. 17(5), pages 835-847, October.
  5. Kohn, Karsten & Antonczyk, Dirk, 2011. "The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany," IZA Discussion Papers 5708, Institute for the Study of Labor (IZA).
  6. Hogrefe, Jan, 2013. "Offshoring and relative labor demand from a task perspective," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-067, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Daniel Baumgarten & Ingo Geishecker & Holger Görg, 2010. "Offshoring, tasks, and the skill-wage pattern," Kiel Working Papers, Kiel Institute for the World Economy 1603, Kiel Institute for the World Economy.
  8. Katrin Sommerfeld, 2012. "Higher and Higher?: Performance Pay and Wage Inequality in Germany," SOEPpapers on Multidisciplinary Panel Data Research 476, DIW Berlin, The German Socio-Economic Panel (SOEP).
  9. Warnke, Arne Jonas & Ederer, Peer & Schuller, Philipp, 2012. "Cognitive skills, tasks and job mobility," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century, Verein für Socialpolitik / German Economic Association 62026, Verein für Socialpolitik / German Economic Association.
  10. Nathalie Chusseau & Michel Dumont, 2012. "Growing income inequalities in advanced countries," Working Papers, ECINEQ, Society for the Study of Economic Inequality 260, ECINEQ, Society for the Study of Economic Inequality.

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