IDEAS home Printed from https://ideas.repec.org/a/oup/oxecpp/v53y2001i3p582-603.html
   My bibliography  Save this article

Skill Compression, Wage Differentials, and Employment: Germany vs the US

Author

Listed:
  • Freeman, Richard
  • Schettkat, Ronald

Abstract

Germany's more compressed wage structure is widely viewed as the main cause of the German-US difference in employment and unemployment, but part of the compression is due to Germany having a narrower distribution of skills than the US. Even adjusted for skills, however, we find that Germany has a more compressed wage distribution than the US. But relatively little of the US-German employment difference can be attributed to the compressed wage distribution. We find that jobless Germans have nearly the same skills as employed Germans and look more like average Americans than like low skilled Americans, which runs counter to the wage compression hypothesis. Given these patterns, the pay and employment experience of low skilled Americans is a poor counterfactual for assessing how reductions in pay might affect jobless Germans. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Freeman, Richard & Schettkat, Ronald, 2001. "Skill Compression, Wage Differentials, and Employment: Germany vs the US," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 582-603, July.
    • Handle: RePEc:oup:oxecpp:v:53:y:2001:i:3:p:582-603
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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 302-308, May.
    2. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    3. Freeman Richard B. & Schettkat Ronald, 1999. "The Role of Wage and Skill Differences in US-German Employment Differences / Die Bedeutung von Lohn- und Qualifikationsunterschieden für die deutschen-amerikanischen Beschäftigungsunterschiede," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(1-2), pages 49-66, February.
    4. Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW Kiel).
    5. Horst Siebert, 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Puhani, Patrick A., 2001. "Wage rigidities in Western Germany? Microeconometric evidence from the 1990s," ZEW Discussion Papers 01-36, ZEW - Leibniz Centre for European Economic Research.
    2. Ochel, Wolfgang, 1998. "Mehr Beschäftigung und weniger Arbeitslosigkeit : Amerika, hast du es besser? (More employment and less unemployment : America - are you any better off?)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 31(2), pages 262-276.
    3. Muysken, Joan & Zwick, Thomas, 2000. "Wage divergence and unemployment: the impact of insider power and training costs," ZEW Discussion Papers 00-37, ZEW - Leibniz Centre for European Economic Research.
    4. Kenworthy, Lane, 2002. "Do affluent countries face an income-jobs tradeoff?," MPIfG Discussion Paper 01/10, Max Planck Institute for the Study of Societies.
    5. Kemmerling, Achim & Bruttel, Oliver, 2005. "New politics in German labour market policy? The implications of the recent Hartz reforms for the German welfare state," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2005-101, WZB Berlin Social Science Center.
    6. Jean-Paul Fitoussi & Francesco Saraceno, 2004. "The Brussels-Frankfurt-Washington Consensus. Old and New Tradeoffs in Economics," Documents de Travail de l'OFCE 2004-02, Observatoire Francais des Conjonctures Economiques (OFCE).
    7. Ronald Schettkat & Rongrong Sun, 2009. "Monetary policy and European unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 94-108, Spring.
    8. Laurence Ball & Nicolás Roux & Marc Hofstetter, 2013. "Unemployment in Latin America and the Caribbean," Open Economies Review, Springer, vol. 24(3), pages 397-424, July.
    9. repec:spo:wpecon:info:hdl:2441/6761 is not listed on IDEAS
    10. Hübler, Olaf & Meyer, Wolfgang, 2000. "Industrial Relations and the Wage Differentials between Skilled and Unskilled Blue-Collar Workers within Establishments: An Empirical Analysis with Data of Manufacturing Firms," IZA Discussion Papers 176, Institute of Labor Economics (IZA).
    11. Amable, Bruno & Gatti, Donatella, 2001. "The Impact of Product Market Competition on Employment and Wages," IZA Discussion Papers 276, Institute of Labor Economics (IZA).
    12. Bozani, Vasiliki & Drydakis, Nick, 2011. "Studying the NAIRU and its Implications," IZA Discussion Papers 6079, Institute of Labor Economics (IZA).
    13. Sonja Jovicic, 2015. "Wage Inequality, Skill Inequality, and Employment: Evidence from PIAAC," Schumpeter Discussion Papers SDP15007, Universitätsbibliothek Wuppertal, University Library.
    14. Arnaud Dupuy & Daniel Fernandez-Kranz, 2011. "International differences in the family gap in pay: the role of labour market institutions," Applied Economics, Taylor & Francis Journals, vol. 43(4), pages 413-438.
    15. Peter Pisár & Ján Huňady & Erika Ľapinová, 2018. "Work Flexibility in Developed Countries: Economic Context and Policy Implications," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(6), pages 684-703.
    16. Eckhard Hein & Achim Truger, 2005. "What ever happened to Germany? Is the decline of the former european key currency country caused by structural sclerosis or by macroeconomic mismanagement?," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(1), pages 3-28.
    17. Dosi, G. & Pereira, M.C. & Roventini, A. & Virgillito, M.E., 2017. "When more flexibility yields more fragility: The microfoundations of Keynesian aggregate unemployment," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 162-186.
    18. George C. Bitros & Kyprianos Prodromidis, 2004. "Welfare benefits and the rate of unemployment: some evidence from the European Union in the last thirty years," Macroeconomics 0410004, University Library of Munich, Germany.
    19. Gebhard Kirchgässner, 2009. "Critical Analysis of Some Well-Intended Proposals to Fight Unemployment," University of St. Gallen Department of Economics working paper series 2009 2009-17, Department of Economics, University of St. Gallen.
    20. Fehn, Rainer, 2002. "Arbeitsmarktflexibilisierung und Arbeitslosigkeit," Discussion Paper Series 54, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    21. Ines Perez-Soba Aguilar & Elena Marquez de la Cruz & Ana Rosa Martinez-Canete & Alfonso Palacio-Vera, 2006. "Capital Stock and Unemployment: Searching for the Missing Link," Economics Working Paper Archive wp_475, Levy Economics Institute.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:53:y:2001:i:3:p:582-603. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.