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Regional age structure and young workers' wages

Author

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  • Garloff, Alfred

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Roth, Duncan

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, fulltime employees in Western Germany during the period 1999-2010. In contrast to other studies, functional rather than administrative spatial entities are used as they provide a more accurate measure of the youth population in an actual labour market. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker's wages by 3 %. Our results also suggest that a substantial part of this effect is due to members of larger age groups being more likely to be employed in lower-paying occupations." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Garloff, Alfred & Roth, Duncan, 2016. "Regional age structure and young workers' wages," IAB-Discussion Paper 201606, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201606
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    Cited by:

    1. Möller, Joachim, 2016. "Lohnungleichheit: Gibt es eine Trendwende? (German wage inequality: Is there a trend reversal?)," IAB-Discussion Paper 201609, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. John Moffat & Duncan Roth, 2017. "Cohort size and youth labour-market outcomes in Europe," Economics Bulletin, AccessEcon, vol. 37(4), pages 2735-2740.
    3. Peters, Jan Cornelius, 2016. "Quantifying the effect of labor market size on learning externalities," Economics Working Papers 2016-11, Christian-Albrechts-University of Kiel, Department of Economics.
    4. Peters, Cornelius, 2015. "Do age complementarities affect labour productivity? Evidence from German firm level data," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112941, Verein für Socialpolitik / German Economic Association.

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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