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The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data

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  • Samuel Muehlemann
  • Harald Pfeifer

Abstract

This paper analyzes the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (Euro4700). The structure of hiring costs is convex, as an increase in the number of hires by 1 percent increases hiring costs by 1.3 percent. We find moderate effects of labor market institutions on the magnitude but none on the structure of hiring costs. Furthermore, we provide evidence in favor of monopsony power in the German labor market.
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Suggested Citation

  • Samuel Muehlemann & Harald Pfeifer, 2016. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 193-218, April.
  • Handle: RePEc:bla:indres:v:55:y:2016:i:2:p:193-218
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    File URL: http://hdl.handle.net/10.1111/irel.12139
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    Cited by:

    1. Bachmann, Rüdiger & Bayer, Christian & Merkl, Christian & Seth, Stefan & Stüber, Heiko & Wellschmied, Felix, 2017. "Worker Churn and Employment Growth at the Establishment Level," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168162, Verein für Socialpolitik / German Economic Association.
    2. Agnese, Pablo & Hromcová, Jana, 2016. "Low-skill offshoring and welfare compensation policies," Economic Modelling, Elsevier, vol. 52(PB), pages 408-426.
    3. repec:eee:labeco:v:52:y:2018:i:c:p:122-131 is not listed on IDEAS
    4. Gartner, Hermann & Carbonero, Francesco, 2017. "Search Cost and Search Duration for New Hires," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168141, Verein für Socialpolitik / German Economic Association.
    5. Yaman, F., 2016. "Structural Estimation of Labor Adjustment Costs," Working Papers 15/22, Department of Economics, City University London.
    6. Krebs, Tom & Scheffel, Martin, 2016. "Labor Market Institutions and the Cost of Recessions," IZA Discussion Papers 10442, Institute for the Study of Labor (IZA).
    7. Stefano Banfi & Benjamín Villena-Roldán, 2016. "Do High-Wage Jobs Attract more Applicants? Directed Search Evidence from the Online Labor Market," Documentos de Trabajo 327, Centro de Economía Aplicada, Universidad de Chile.
    8. Martin Scheffel & Tom Krebs, 2017. "Labor Market Institutions and the Cost of Recessions," 2017 Meeting Papers 1438, Society for Economic Dynamics.
    9. Carbonero, Francesco & Offermanns, Christian J. & Weber, Enzo, 2017. "The fall of the labour income share: the role of technological change and imperfect labour markets," IAB Discussion Paper 201728, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Harald Pfeifer & Uschi Backes-Gellner, 2017. "Another piece of the puzzle: Firms' investment in training as optimization of skills inventory," Economics of Education Working Paper Series 0136, University of Zurich, Department of Business Administration (IBW), revised Jun 2018.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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