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The Role of Wage and Skill Differences in US-German Employment Differences

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Richard B. Freeman
Ronald Schettkat

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Abstract

Greater job creation in the US than in Germany has often been related to greater wage dispersion coupled with less regulated labour and product markets in the US. Based on the Comparative German American Structural Database and the International Adult Literacy Survey we find that employment of skilled to unskilled labour is unrelated to differences in skill premium but that changes in relative employment are related to changes in relative wages raising the possibility of some substitution behavior. Still, the differing dispersion of wages is not a major contributor to differences in employment rates. The jobs problem in Germany is one of a general lack in demand for labor.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7474.

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Date of creation: Jan 2000
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Handle: RePEc:nbr:nberwo:7474

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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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. Siebert, Horst, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer. [Downloadable!] (restricted)
  2. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May. [Downloadable!] (restricted)
  3. Richard B. Freeman & Ronald Schettkat, 2000. "Low Wage Services: Interpreting the US - German Difference," NBER Working Papers 7611, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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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. Lawrence Kahn, 2003. "Labour Market Institutions and Unemployment in OECD Countries," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(4), pages 25-32, October. [Downloadable!]
  2. Puhani, Patrick A., 2001. "Wage Rigidities in Western Germany? Microeconometric Evidence from the 1990s," IRISS Working Paper Series 2001-07, IRISS at CEPS/INSTEAD. [Downloadable!]
    Other versions:
  3. Muysken, Joan & Zwick, Thomas, 2000. "Wage divergence and unemployment : the impact of insider power and training costs," ZEW Discussion Papers 00-37, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Muysken,Joan & Hoppe,Mombert & Rieder,Hannah, 2002. "The Impact of education and mismatch on wages: Germany, 1984-2000," Research Memoranda 041, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  5. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2002. "Labour Market Institutions and Demographic Employment Patterns," CEPR Discussion Papers 3448, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Jurajda, Stepán & Harmgart, Heike, 2004. "When Are ‘Female’ Occupations Paying More?," IZA Discussion Papers 985, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Eswar Prasad, 2003. "What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data," IMF Working Papers 03/4, International Monetary Fund. [Downloadable!]
    Other versions:
  8. Richard B. Freeman, 2000. "Is the U.S. Labor Market the Model for Advanced Countries?," Canadian Public Policy, University of Toronto Press, vol. 26(s1), pages 187-200, July. [Downloadable!] (restricted)
  9. Jana Kremer, 2001. "Labor Unions, Unemployment, and Inequality in an OLG-Model with Heterogeneous Agents," Discussion Paper Series 207, Universitaet Augsburg, Institute for Economics. [Downloadable!]
  10. Luigi Bonatti, 2000. "A two-sector model of the effects of wage compression on unemployment and industry distribution of employment," Department of Economics Working Papers 0001, Department of Economics, University of Trento, Italia. [Downloadable!]
  11. Carsten Ochsen, 2004. "Zukunft der Arbeit und Arbeit der Zukunft in Deutschland," Thuenen-Series of Applied Economic Theory 45, University of Rostock, Institute of Economics, Germany. [Downloadable!]
    Other versions:
  12. Birgit Jakob, 2003. "Skilled labor spillovers from University to High Tech Corporations: The Case of the Research Triangle Park and the University of North Carolina at Chapel Hill," NEURUS papers neurusp4, NEURUS - Network of European and US Regional and Urban Studies. [Downloadable!]
  13. Harmgart, Heike & Jurajda, Stepan, 2004. "When do 'Female' Occupations Pay More?," CEPR Discussion Papers 4270, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Paul Beaudry & David Green, 2000. "The Changing Structure of Wages in the US and Germany: What Explains the Differences?," NBER Working Papers 7697, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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