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Labor market tightness and individual wage growth: evidence from Germany

Author

Listed:
  • Stephan Brunow

    (University of Applied Labour Studies (HdBA))

  • Stefanie Lösch

    (Technische Universität Dresden)

  • Ostap Okhrin

    (Technische Universität Dresden)

Abstract

It is often stated that certain occupations in Germany, because of “Demographic Change “, are dwindling, implying a labor shortage. We investigate the 10-year wage growth of young employees entering the labor market in different occupations. Our findings suggest that regional labor market tightness in occupational fields significantly explains wage growth. Individuals who start their careers in a tighter labor market enjoy higher wage growth than workers in more relaxed labor markets. We identify some occupational fields where the effect is especially strong, such as several engineering groups, IT occupations, technicians, and some commercial occupations. Interestingly, health-care occupations reveal a reverse relation.

Suggested Citation

  • Stephan Brunow & Stefanie Lösch & Ostap Okhrin, 2022. "Labor market tightness and individual wage growth: evidence from Germany," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-21, December.
    • Handle: RePEc:spr:jlabrs:v:56:y:2022:i:1:d:10.1186_s12651-022-00322-7
    DOI: 10.1186/s12651-022-00322-7
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    1. Kroczek, Martin & Koch, Andreas, 2024. "The reaction of wages to skill shortage in nursing," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302406, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Labor shortages; Occupation-specific wage curve; Demographic change; Wage growth;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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