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The structure of hiring costs in Germany - evidence from firm-level data

  • Samuel Muehlemann

    ()

    (Department of Economics, University of Bern, Switzerland; IRLE, University of California, Berkeley, USA; IZA, Bonn, Germany)

  • Harald Pfeifer

    ()

    (Federal Institute for Vocational Education and Training, Bonn, Germany; ROA, Maastricht University, The Netherlands)

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 (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. 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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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0077_lhwpaper.pdf
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0077.

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Length: 37 pages
Date of creation: Apr 2012
Date of revision: Sep 2013
Handle: RePEc:iso:educat:0077
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  16. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
  17. Dube, Arindrajit & Lester, T. William & Reich, Michael, 2013. "Minimum Wage Shocks, Employment Flows and Labor Market Frictions," Institute for Research on Labor and Employment, Working Paper Series qt27z0006g, Institute of Industrial Relations, UC Berkeley.
  18. Kramarz, Francis & Michaud, Marie-Laure, 2010. "The shape of hiring and separation costs in France," Labour Economics, Elsevier, vol. 17(1), pages 27-37, January.
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